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Agenda 2019 05-14CITY OF POWAY BUDGET REVIEW COMMITTEE MAY 14, 2019 — REGULAR MEETING — 6:00 P.M. CITY COUNCIL CHAMBERS — OBSERVATION ROOM 13325 CIVIC CENTER DRIVE, POWAY, CALIFORNIA ROLL CALL Peter DeHoff, Mike Firenze (Acting), Bernie Guzman, Dan Mathson, Brian Pepin PUBLIC ORAL COMMUNICATIONS (State law may prohibit the Budget Review Committee from taking action on items not on the agenda. Your concerns will be referred to staff.) COMMITTEE BUSINESS 1. Approval of Minutes — April 30, 2019 and May 2, 2019 2. Department Budget Review — Community Services 3. Department Budget Review — Safety Services 4. Revenue/Fund Schedules/Fiscal Forecast 5. Review of Status of 2017 and 2018 Budget Review Committee Recommendations 6. Discussion — Annual Report of Recommendations to the City Council 7. Chair and Committee Member Initiated Items ADJOURNMENT The City of Poway complies with the Americans with Disabilities Act. Upon request this agenda will be made available in appropriate alternative formats to persons with disabilities as required by section 202 of the American with Disabilities Act of 1990. Any person with a disability who requires a modification or accommodation in order to participate in a meeting should direct such requests to the City Clerk's Office at 858-668-4530 at least 24 hours before the meeting, if possible. BUDGET REVIEW COMMITTEE AGENDA — MAY 14, 2019 State of California ) ) ss. AFFIDAVIT OF POSTING County of San Diego ) 1, Faviola Medina, City Clerk of the City of Poway, hereby declare under penalty of perjury that this notice of a Regular Meeting as called by the Budget Review Committee of the City of Poway was posted and provided on May 10, 2019, at 5:00 p.m. Said meeting to be held at 6:00 p.m., May 14, 2019, in the Poway City Council Chambers Observation Room, 13325 Civic Center Drive, Poway, California. Said notice was pos on a Bulletin Board at the entrance to City Hall. Faviola Med na, CMC, City Clerk K Page 1 – BUDGET REVIEW COMMITTEE May 14, 2019, Item #1 CITY OF POWAY, CALIFORNIA MINUTES OF THE BUDGET REVIEW COMMITTEE REGULAR MEETING APRIL 30, 2019 The April 30, 2019 Regular Meeting of the Budget Review Committee was called to order at 6:02 p.m. by Assistant City Manager Wendy Kaserman at the Poway City Council Chambers Observation Room, 13325 Civic Center Drive, Poway, California. COMMITTEE MEMBERS PRESENT Peter De Hoff, Bernie Guzman, Dan Mathson, Brian Pepin COMMITTEE MEMBERS ABSENT None. STAFF MEMBERS PRESENT Wendy Kaserman, Assistant City Manager Donna Goldsmith, Director of Finance Alex Castanares, Budget Administrator Jenny Paglinawan, Senior Administrative Assistant Kseniia Izgarskaia, Finance Intern PUBLIC ORAL COMMUNICATIONS None. COMMITTEE BUSINESS 1. Welcome The Committee members and staff made introductions. Assistant City Manager Kaserman announced that Councilmember Mullin’s appointment, Barry Long, was unable to fulfill his role as a Committee member and that a notice of the vacancy was posted. She also announced that Councilmember Mullin would be seeking Council concurrence to appoint an acting Budget Review Committee member, Mr. Mike Firenze, at the May 7, 2019 City Council meeting. Mr. Firenze was attending the committee meeting tonight as a member of the public. Members of the public in attendance also introduced themselves including Chris Hazeltine, the new City Manager effective May 6th and Torrey Powers, past Vice Chair of the Budget Review Committee. 2. Roll Call 3. Budget Review Committee Mission and Charter (including Brown Act) Assistant City Manager Kaserman reviewed the Budget Review Committee Mission and Charter, which was recently amended. Committee Member Mathson inquired what changes Page 2 – BUDGET REVIEW COMMITTEE May 14, 2019, Item #1 were made to the Charter. Assistant City Manager Kaserman responded that the Charter had been amended to remove policy recommendations to focus the emphasis on budget-related items. She provided an example of a robust discussion of the Housing in Lieu fee during one of last year’s Budget Review Committee meetings that was focused on policy, not on budget. Committee members were reminded that all communication is subject to the Brown Act. Torrey Powers offered public comment that the prior Budget Review Committee discussion on the Housing in Lieu fee was focused on the availability of funds in the Housing Fund and was related to the budget and not focused exclusively on policy issues. 4. Confirmation of Committee Chairman and Vice Chairman Committee Member De Hoff moved to confirm Committee Member Pepin as Chairman. The motion was seconded by Committee Member Mathson and carried unanimously. Committee Member Pepin moved to confirm Committee Member De Hoff as Vice Chairman. The motion was seconded by Committee Member Guzman and carried unanimously. 5. Assistant City Manager Overview Assistant City Manager Kaserman provided a summary of the City’s budget process and funds and expenditures. She described several key factors influencing the General Fund budget. She stated that overall revenues are fairly flat while expenditures continue to rise. Since Poway is mostly built out, there is limited opportunity for revenue growth in sales tax and property tax associated with new development. Assistant City Manager Kaserman referred to recent meetings with the City’s sales tax consultant and indications that the economy may also be slowing, thereby affecting overall growth in sales tax. City sales tax is actually projected to decrease in FY 2019-2020. From an expenditure perspective, the City is facing rising pension costs, as well as rising health care costs. Other cost drivers include inflationary adjustments in existing agreements, fee increases by other governmental agencies due for regional and state permits, capital facilities maintenance costs, and the costs associated with replacement of vehicles and equipment. Assistant City Manager Kaserman pointed out that there are no new personnel requests in the City Manager’s recommended budget. Additionally, there are no new Capital Improvement Program (CIP) projects that will be funded by the General Fund. There were requests, however she and the City Manager agreed that the General Fund could not afford the additional increase in expenditures. Assistant City Manager Kaserman also discussed several issues on the horizon that could substantially impact the General Fund. These include the cost of Mickey Cafagna Community Center depending upon where bids come in; the Espola Road Project; the Los Penasquitos Lagoon Restoration Project; a Sales Tax Allocation Dispute with the State, and potential future direction from the City Council related to the Landscape Maintenance Districts. It was noted that copies of the General Fund Reserve Policy will be provided at the May 2, 2019 Committee meeting. Committee members and staff discussed CalPERS (California Public Employees’ Retirement System) unfunded liability costs. Chairman Pepin requested further clarification on the three CalPERS retirement tiers, which Assistant City Manager noted as “Classic” Tier I, “Classic” Tier II, and PEPRA (Public Employees’ Pension Reform Act) employees hired on or after January 1, 2013. Vice Chairman De Hoff inquired whether the City could “buy-out” Tier 2 employees from PERS and convert them to PEPRA employees. Assistant City Manager Kaserman responded that may not be legal. Committee Member Mathson inquired whether Page 3 – BUDGET REVIEW COMMITTEE May 14, 2019, Item #1 retired employees are a factor in the unfunded liability calculation, and Assistant City Manager Kaserman confirmed they are. Chairman Pepin inquired where unfunded liability costs were reflected in the budget. Assistant City Manager Kaserman clarified the costs are reflected in the individual employee labor calculations. Committee Member Mathson inquired how many employees belonged to each personnel group. Copies of the classifications lists from the Memorandum of Understanding (MOU) for each labor group will be provided at the May 2, 2019 meeting. 6. Overview/Understanding the Budget Document Assistant City Manager Kaserman provided an overview of the fiscal forecast document, describing how to read the revenues, expenditures and fund balance information. She explained that these are the high-level budget documents and that Budget Administrator Castanares would be walking the committee members through the information provided for each department and division budget. Committee Member Mathson requested copies of the balance sheets. Director of Finance Goldsmith stated they would be reviewed at a future Budget Review Committee meeting. Member of the public, Mike Firenze, inquired whether projected and adopted amounts from previous fiscal years are available. Director of Finance Goldsmith responded that these charts are included in the budget documents and will be reviewed at future committee meetings in detail as each department presents its budget. Budget Administrator Castanares provided an overview of the department and division budget information provided to the Budget Review Committee members. She demonstrated how this information rolls up into the higher-level documents that Assistant City Manager Kaserman had previously reviewed. Following Budget Administrator Castanares’ presentation, Assistant City Manager Kaserman reviewed the budget by fund information, demonstrating how costs are allocated across the City’s different funds. Committee members and staff discussed the mechanics of cost- allocation. Member of the Public, Chris Olps asked why the Stormwater Compliance Division in Development Services is not allocated in the same way as the Stormwater and Flood Control Division in Public Works. Vice Chairman De Hoff commented that color-blind palettes may be useful on budget documents that are available to the public. ADJOURNMENT Chairman Pepin adjourned the meeting at 8:48 p.m. ___________________________________ Jenny Paglinawan Senior Administrative Assistant Page 1 – BUDGET REVIEW COMMITTEE May 14, 2019, Item #1 CITY OF POWAY, CALIFORNIA MINUTES OF THE BUDGET REVIEW COMMITTEE REGULAR MEETING MAY 2, 2019 The May 2, 2019 Regular Meeting of the Budget Review Committee was called to order at 6:02 p.m. by Chairman Pepin at the Poway City Council Chambers Observation Room, 13325 Civic Center Drive, Poway, California. COMMITTEE MEMBERS PRESENT Peter De Hoff, Bernie Guzman, Dan Mathson, Brian Pepin COMMITTEE MEMBERS ABSENT None. STAFF MEMBERS PRESENT Wendy Kaserman, Assistant City Manager Donna Goldsmith, Director of Finance Alex Castanares, Budget Administrator Jodene Dunphy, Director of Human Resources & Risk Management Jenny Paglinawan, Senior Administrative Assistant Kseniia Izgarskaia, Finance Intern Chris Hazeltine, City Manager effective May 6, 2019 was also present. PUBLIC ORAL COMMUNICATIONS Torrey Powers stated that she was not given an opportunity to provide public comment on the Budget Review Committee Charter at the April 30, 2019 meeting. Assistant City Manager Kaserman offered that the May 8, 2019 Agenda would include an item for Budget Review Committee Charter Discussion in order to provide Ms. Powers with the opportunity comment on the document. Ms. Power expressed her appreciation that the item would be on the next agenda for comment. Ms. Powers also stated that some topics she spoke about during last year’s Budget Review Committee meetings and were not included in the minutes however, they later appeared as a part of a political “hit piece” against her during the 2018 election. COMMITTEE BUSINESS 1. Approval of Minutes – April 30, 2019 An additional materials memo was distributed noting that this item has been moved to the May 14, 2019 Budget Review Committee meeting agenda. Assistant City Manager explained the move was necessary to comply with the Brown Act that requires minutes to be posted 72 hours in advance of the meeting which was not possible given the short length of time between the April 30 meeting and the May 2 meeting. Page 2 – BUDGET REVIEW COMMITTEE May 14, 2019, Item #1 2. Department Budget Review – Legislative and Administrative Assistant City Manager Kaserman distributed a handout of her presentation and provided an overview of the department’s primary functions. Committee Member Guzman inquired about the role of the Community Outreach Coordinator. Assistant City Manager Kaserman responded that the position oversees/updates the City’s official social media accounts. Committee. Committee Member Mathson asked what employees do during “down times” and what happens when employees are too busy. Assistant City Manager Kaserman responded that City Council identifies priorities each year. Based, on those priorities, department goals are set, and work is performed based on those priorities. Committee Member De Hoff inquired whether the City had an Assistant City Attorney. Assistant City Manager Kaserman stated this position is filled by John Ramirez of Rutan & Tucker. Assistant City Manager Kaserman reviewed changes to the proposed FY 2019-20 budget from the FY 2018-19 adopted budget. These include a decrease in personnel-related salary and benefits costs, removal of election costs as well as removal of certain conferences and related expenses in the Economic Development Division. She noted no new budget items were requested, although the City Attorney services agreement provides for an annual inflationary adjustment, resulting in a 2.6% increase to the division’s budget. Assistant City Manager Kaserman explained that the agreement includes a retainer as well as hourly rates for additional services that fall outside of the retainer. Chairman Pepin opened the floor for questions from Committee Members and the public. Committee Member De Hoff commented that including percentages and color gradients to summary fund pages may help readers quickly identify changes across fiscal years. Committee Member Mathson inquired at what amount assets are capitalized. Assistant City Manager Kaserman responded that the threshold is $5,000. The City is working on a new report that will not reflect unused accounts. Committee Member Mathson asked for clarification on the Capital Outlay Rentals. Assistant City Manager Kaserman responded that these are amounts the City budgets to cover costs of replacing assets. 3. Department Budget Review – Finance Director of Finance Goldsmith distributed a handout of her presentation and provided an overview of the department’s primary functions. Committee Member Mathson inquired whether the City hosts its own server and whether the Community Outreach Coordinator works with the Information Technology Division. Director of Finance Goldsmith responded yes to both questions and stated that a refresh of the City website is in the works. Vice Chairman DeHoff inquired whether the City has considered automated water meters (AMI). Director of Finance Goldsmith responded this has been mentioned in the past but would potentially cost millions of dollars to implement and those costs would be incorporated into rates. Committee Member Mathson commented that many resources can be stored in a cloud database as opposed to physical servers. Director of Finance Goldsmith reviewed proposed department goals, including: utilizing a module in Munis for the Comprehensive Annual Financial Report (CAFR); Installation of an Page 3 – BUDGET REVIEW COMMITTEE May 14, 2019, Item #1 update to the NorthStar Utility Billing System as well as transitioning to a new utility customer portal, Customer Connect; the Water and Sewer Rate Cost of Service Study; and proactive response to Senate Bill 998. Vice Chairman De Hoff inquired whether delinquency of utility payments is a problem for the City. Assistant City Manager Kaserman responded that it has decreased due to improved communication with residents. Committee Members and staff discussed the effects of Senate Bill 998, specifically, imposing new restrictions on residential water service discontinuation in California. They also discussed the implementation and schedule of the Water and Sewer Cost of Service Study. Committee Member Mathson expressed concern that public opinion will not be considered in the study. Assistant City Manager Kaserman responded that extensive outreach and workshops will provide opportunities for public participation. The consultant will also be providing multiple options of the model that will be presented publicly. Director of Finance Goldsmith reported changes in the department’s proposed budget from the prior fiscal year budget, including: elimination of Banner software maintenance; overall increase to personnel expenses due to CalPERS and benefits costs; reduction to professional development (for conferences attended every other year) in Information Technology and reduction in data processing consulting fee. New budget requests include consulting fees for server migration; Mobile Device Management (MDM) Software costs; and Enterprise Software Applications costs. Vice Chairman De Hoff requested clarification on the purchase of a suburban in the capital outlay budget. Budget Administrator Castanares clarified that what is listed is the existing item that needs to be replaced, not what will be purchased. Chairman Pepin questioned what piece of equipment a Badger Cruz Air is, to which Assistant City Manager Kaserman reported it is an excavator and Public Works staff could provide more detail at the May 8 Budget Review Committee meeting. Committee members and staff discussed the history of the City’s investment of funds, reserves, and sources of revenue. Committee Member Mathson requested balance sheets to be provided, to which Assistant City Kaserman responded will be distributed at the May 14 meeting. Vice Chairman De Hoff asked if there is a difference in the amount of property taxes received from low income housing. This will be researched and responded to at a future meeting. Chairman Pepin opened the floor for questions from Committee Members and the public. In response to earlier inquiries from the Committee on server backup and retrieval, member of the public Chris Olps commented that knowing what type of backup (whether “hot” or “cold”) the City has would be helpful. Mr. Olps also commented that Information Technology falls under the Finance Department but services the whole City. Assistant City Manager Kaserman responded that I.T. costs are allocated. Staff later reported responses from the Information Technology Manager in response to Committee Member inquires related to backup of the City’s server. Mr. Olps also inquired about the increased cost of the auditor’s fee. Finance Director Goldsmith responded that due to the timing with the Interim Audit and the hiring of a new audit firm, there will be an overlap of costs in the current fiscal year only as a result of a timing difference. Committee Member Mathson commented that a balance sheet would be helpful in knowing where funds are distributed. Page 4 – BUDGET REVIEW COMMITTEE May 14, 2019, Item #1 4. Department Budget Review – Human Resources & Risk Management Director of Human Resources & Risk Management (HR/Risk Mgmt. Director) Dunphy distributed handouts and provided an overview of the department’s primary functions. HR/Risk Mgmt. Director Dunphy mentioned there are two active labor unions in the City of Poway along with a Management/Confidential employee group that is unrepresented. Committee Member Mathson inquired about the length of most contracts, to which HR/Risk Director Dunphy responded it depends on multiple factors but, the typical labor contract is two years, which is the current length of both labor contracts in Poway. Committee Member Mathson inquired whether unions provide pensions. HR/Risk Mgmt. Director Dunphy responded that the City provides the pensions, but the employees also contribute to the cost of the City provided pension. Vice Chairman De Hoff inquired linking pay increases to a Consumer Price Index (CPI). Staff responded the previous wage increase was not tied to CPI and it would be difficult to tie them to CPI because the City and employees would be agreeing to an unknown increase. HR/Risk Mgmt. Director Dunphy explained the City’s participation in the California Joint Powers Insurance Authority (CJPIA) for support and resources related to the City’s risk management program. Vice Chairman De Hoff inquired whether other alternatives for these services were reviewed. HR/Risk Mgmt. Director Dunphy responded yes, but CJPIA has demonstrated to be the best option. Committee Member Mathson inquired where unemployment insurance was reflected in the budget. Staff responded this cost was included with personnel expenses per employee. HR/Risk Mgmt. Director Dunphy outlined the goals of the department and changes in the proposed budget from the prior fiscal year. The decrease in the capital outlay budget is due to a fingerprinting machine that was purchased this fiscal year. The decrease in the Risk Management Division’s operations and maintenance budget is due to a decrease in the liability insurance premium based on favorable claims experience over the past five years. Chairman Pepin opened the floor for questions from Committee Members and the public. Member of the Public, Chris Olps inquired whether the violence in the workplace training would address recent events related to the subject, to which HR/Risk Mgmt. Director Dunphy responded yes. Mr. Olps complimented the City for increasing employee development and recognition, which retains employees. He suggested the term “rental” in terms of capital assets be modified for clarity, such as “life cycle management” or “end-of-life management.” He inquired about the traffic control equipment, to which staff responded Public Works staff can provide further detail. Mr. Olps inquired about an expenditure of $18,904 in Risk Management’s budget in Fiscal Year 2017-18. A response will be provided at the meeting on May 8. Vice Chairman DeHoff passed out a graph he put together and, as a result of his analysis, has several questions. He suggested the City take a more holistic approach to analyzing costs. 5. Chair and Committee Member Initiated Items None. Page 5 – BUDGET REVIEW COMMITTEE May 14, 2019, Item #1 ADJOURNMENT Committee Chairman Pepin adjourned the meeting at 8:37 p.m. ___________________________________ Jenny Paglinawan Senior Administrative Assistant