Item 4.1 - First Qtr Budget Update for Fiscal Year 2014-15a
�' 7N THE C
DATE:
City of Poway
COUNCIL AGENDA REPORT
October 21, 2014
APPROVED
APPROVED AS AMENDED ❑
(SEE MINUTES)
DENIED
❑
REMOVED
❑
CONTINUED
Resolution No. +►-�—
H-OW
TO: Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Housing Authority
Honorable Chairman and Members of the Successor Agency
to the Poway Redevelopment Agency
FROM: Daniel Singer, City Manager /Executive Director,
INITIATED BY: Scott Edwards, Director of Administrative Services
Peter Moote, Assistant Director of Administrative Service4�4,
Andrew White, Finance Manager4t
SUBJECT: First Quarter Budget Update for FY 2014 -15
Summary:
With FY 2014 -15 first quarter activity now complete, this first report identifies numerous
adjustments completed under City Manager authority and also recommends
appropriations for updated budget requirements. Additionally, staff has revised certain
revenue projections based upon FY 2013 -14 year -end closing as well as FY 2014 -15
year -to -date activity. This results in a slight improvement to the General Fund revenue
base for the current fiscal year. A full report on FY 2013 -14 year -end closing is
scheduled for City Council consideration on November 18, 2014.
Recommended Action:
It is recommended the City Council receive this report and adopt the attached
resolutions to approve the FY 2014 -15 first quarter adjustments.
Backaround:
On June 17, 2014, the City Council approved Resolution 14 -041 to adopt the FY 2014-
15 Proposed. Budget. As adopted, the budget included a balanced General Fund and
reserves that significantly exceed the recommended minimum level identified in our
Financial Policy. In addition to adopting the City's annual budget, Resolution 14 -041
authorized the City Manager to make changes in department operating, program, and
capital improvement budgets during FY 2014 -15 as deemed desirable and necessary to
meet the City's needs.
1 of 14 October 21, 2014 Item #4.1
FY 2014 -15 First Quarter Budget Update
October 21, 2014
Page 2
Findings
Revenues
Based upon the FY 2013 -14 year -end closing as well as FY 2014 -15 year -to -date
activity, staff anticipates a minor improvement to the City's FY 2014 -15 General Fund
revenue base. Noteworthy first quarter revenue activity includes the following:
Property Tax
The FY 2014 -15 Adopted Budget's regular Property Tax revenue was based upon
estimated FY 2013 -14 revenue of $8,126,532, with a 3% increase applied. Actual FY
2013 -14 Property Tax revenue ended higher at $8,162,461, an increase of $35,929 (or
roughly $37,000 with a 3% increase applied for FY 2014 -15). Additionally, San Diego
County recently reported the City of Poway's Assessed Value (AV) increased by 4.63 %.
Although this exceeds original projections by 1.63 %, a revised Property Tax estimate is
not included with this report. The City's projection for regular Property Tax revenue will
be updated after the year's fourth and final apportionment is received from San Diego
County in November.
Property Tax In -lieu of Motor Vehicle
Similar to the City's regular Property Tax, the FY 2014 -15 Adopted Budget projected
Property Tax In -Lieu of Motor Vehicle revenue at 3% over FY 2013 -14 estimated. With
the City's increase in AV of 4.63% (as reported by San Diego County), this revenue
source is now projected to exceed the Adopted Budget estimate by $65,530.
Sales Tax
The Sales Tax projection included in the FY 2014 -15 Adopted Budget was based upon
estimated FY 2013 -14 revenue of $12,027,114, with a 3% increase applied. Actual FY
2013 -14 Sales Tax revenue ended the year at $12,047,687, an increase of $20,573 (or
roughly $21,000 with a 3% increase applied). At this time, the adopted estimate for FY
2014 -15 appears reasonable and no adjustment is recommended.
Interest Earnings
The City's Interest Earnings are beginning to rise. With rates at historic lows, even
small increases significantly affect the City's overall earnings. For the FY 2014 -15
Adopted Budget, staff projected the General Fund's Interest Earnings to be roughly the
same as FY 2013 -14. However, with rising rates, staff estimates FY 2014 -15 Interest
Earnings will now exceed the Adopted Budget estimate by approximately $130,000.
Revenue Outlook
While it is still early in the fiscal year, there is sufficient first quarter information to
confirm revenues are trending positively for FY 2014 -15. Considering Property Tax In-
lieu of Motor Vehicle and Interest Earnings revenue alone, it appears reasonable to
project an additional $200,000 in General Fund revenue. Consistent with prior years,
staff will conduct a more comprehensive review with the City's FY 2013 -14 Year -End
report in November, followed by the FY 2014 -15 Second Quarter update in early 2015.
2 of 14 October 21, 2014 Item #4.1
FY 2014 -15 First Quarter Budget Update
October 21, 2014
Page 3
Expenditures — Transfers
Pursuant to Resolution 14 -041, the City Manager has approved first quarter transfer
adjustments using funds appropriated with the FY 2014 -15 Adopted Budget. The
schedule of completed transfer adjustments is included with this report as Attachment 1,
and includes the following notable item:
Development Services
The City's engineering team has experienced multiple vacancies this fiscal year.
Development activity levels require ongoing engineering support (e.g., inspections, plan
checking) while the City conducts recruitments to fill the vacancies. Year -to -date
transfers include the use of $91,400 from salary and benefit accounts (due to vacancy
savings) for outside professional services.
Expenditures — Appropriations
Recommended appropriations for the first quarter total $293,535, with a General Fund
impact of $222,190. The schedule of prior appropriation adjustments is included as
Attachment 2, which represents first quarter appropriations previously approved by the
City Council (under separate action). Schedules of new appropriations are included as
exhibits to the City's resolution (Attachment 3) and the Housing Authority's resolution
(Attachment 4). Noteworthy items are as follows:
Administrative Services
The Human Resources Division (0101) requests $64,000 for several efforts, including:
recruitment for the Public Works Director position; background reviews of prospective
Safety Services employees; and an audit of the City's compensation practices for
compliance with the Fair Labor Standards Act.
The Finance Division (0103) recommends a $5,000 appropriation for additional audit
services. New rules issued by the Governmental Accounting Standards Board (GASB)
resulted in a change to the way pensions are reported in financial statements, which now
require additional independent audit procedures. In order to obtain the information
necessary to meet the new requirements, the City's current biannual actuarial valuation
for the PARS retirement enhancement plan (a "closed" plan since 2012) will need to be
performed on an annual basis.
Additionally, $20,000 in appropriations is requested for Capital Replacement Equipment
(0108) to replace the aging pool auto - chlorine system. The system was originally
purchased in 2002 and has exceeded its useful life.
Community Services
An $18,000 appropriation is requested for Old Poway Park (0205) to fund the ongoing
restoration of the Poway Midland Railroad cable car (to be completed by the Poway
Midland Railroad Volunteers). By agreement, the City funds this restoration project, with
roughly $69,000 contributed to the cable car restoration, to date. An additional
appropriation would allow the volunteers to completely retrofit the car's axles to minimize
the load on the drive system, motor, and batteries.
3 of 14 October 21, 2014 Item #4.1
FY 2014 -15 First Quarter Budget Update
October 21, 2014
Page 4
Development Services
Appropriations totaling $41,000 are recommended for Land Development Engineering
(0305) and Engineering Inspection (0306). Additional funding would allow the
department to continue outside professional engineering services while recruitments are
conducted to fill multiple vacancies.
An appropriation of $23,000 is recommended for Storm Water Engineering (0308) to
complete an update of the City's Jurisdictional Urban Runoff Management Plan
( JURMP). Updating the JURMP is a requirement of the new Storm Water permit.
Under Housing Programs (0309), an appropriation of $63,000 is recommended for
additional legal and appraisal services. This includes $40,000 in legal support services
related to the Next Stage U and Habitat for Heroes projects.
Public Works
For Water Supply, Treatment, and Storage (0402), staff recommends a $10,000
appropriation to complete electrical, irrigation, and landscaping improvements at
Sagecrest reservoir. This project results from neighborhood input received during the
CUP review process concerning additional cellular facilities at the reservoir. The City
and cell carriers have agreed to improve the area's aesthetics by replacing a chain -link
enclosure with a block wall as well as enhancing landscaping and lighting. Including this
action, a total of $60,000 is appropriated for this purpose.
An appropriation of $12,400 is requested in Parks, Trails, and Maintenance (0418) for
the Kumeyaay Ipai Interpretive Center. Funding includes $7,400 to re- establish City
responsibility for landscape maintenance services (more recently performed by
volunteers) and $5,000 for irrigation repair. An additional $7,600 is required to replace
damaged plants. However, funds are available in the Kumeyaay Ipai project account
(1671) for this purpose. Considering all funding sources, the total budget for the project
is $20,000.
Safety Services
While there are no material adjustments to report at this time, it is important to highlight
an early trend in the department's overtime expenses. Safety Services has experienced
increased overtime, primarily attributable to a heightened number of vacancies and
employee injuries (both industrial and non - industrial). As of first quarter -end, overtime
expenses excluding mutual aid activity total approximately $508,200, or 36% of available
appropriations. At this level, the department's overtime exceeds average year -to -date
activity for the past three fiscal years by roughly 30 %. Staff does not recommend
additional appropriations at this time. However, this expense will be closely monitored
going forward. The City Council will receive updates via upcoming quarterly reports
should adjustments be needed.
4 of 14 October 21, 2014 Item #4.1
FY 2014 -15 First Quarter Budget Update
October 21, 2014
Page 5
Capital Improvement Projects
For Veteran's Park, staff recommends appropriating $10,225 from the Veteran's
Memorial Fund (777- 1189A). The appropriations would re- establish a $20,000 funding
baseline for the fiscal year, which supports tile replacement and ongoing maintenance.
The appropriations also include $3,500 to replace existing plastic trash cans with sturdier
cast iron trash cans.
Successor Agency
$75,000 is requested for legal services associated with the dissolution of redevelopment.
This includes $65,000 for pending litigation and $10,000 concerning the pending
repayment of former Redevelopment Agency loans.
General Fund Summary
Staff has prepared a revised General Fund summary (Attachment 5) to reflect the FY
2014 -15 Adopted Budget, as amended through the first quarter. The summary identifies
the net change in revenues and allocated expenditures, with a revised projection for the
change in fund balance of $53,876.
Reserve Balances
With the FY 2014 -15 budget adoption, the projected General Fund balance was $20.4
million. Staff is not revising the projected General Fund balance for this report. A more
thorough review of General Fund revenues and expenditures will take place for the FY
2013 -14 Year -End Report as well as the FY 2014 -15 Second Quarter update. The
projected General Fund balance may be adjusted at that time.
Additional reserves, which are comprised of unrestricted General Fund monies, include
the Economic Uncertainty Fund at $3.1 million, the Street Maintenance Fund at $4.5
million, and the Pension Stabilization Fund at $2.4 million.
Fiscal Impact:
The attached resolutions confirm the City Manager approved budget transfers and
authorize appropriations for the proposed First Quarter budget amendments.
Environmental Review:
None required.
Public Notification:
None.
Attachments: 1. Schedule of First Quarter Completed Transfers
2. Schedule of First Quarter Prior Approved Appropriations
3. City Resolution for First Quarter Recommended Appropriations
4. Housing Authority Resolution for First Quarter Recommended
Appropriations
5. General Fund Summary
5 of 14 October 21, 2014 Item #4.1
First Quarter Completed Transfers to City Financial Program for Fiscal Year 2014 -15
Operating Budgets
Development Services
Division
Transfer From Account
Transfer To Account
Amount
Engineering Inspection (0306) Regular Salaries (1110) Other Professional Fees (1799) 39,000
Engineering Inspection (0306) Benefits (1300) Other Professional Fees (1799) 22,000
Land Development Eng (0305) Regular Salaries (1110) Other Professional Fees (1799) 19,400
Land Development Eng (0305) Benefits (1300) Other Professional Fees (1799) 11,000
Public Works
Division
Transfer From Account
Transfer To Account
Amount
Street Maintenance (0411) Sidewalk & Barricades R & M (4324) Other Equipment (4899) 3,005
Attachment 1
6 of 14 October 21, 2014 Item #4.1
First Quarter Completed Appropriations to City Financial Program for Fiscal Year 2014 -15
Capital Improvement Projects /Programs
Operating Budgets
Project Description
Fund
Source Fund /Prof. #
Development Services
Water Corrosion Repair Water Fund (510) 510 -1760A
Water Conservation Program Water Fund (510) 510 -1167A
(60,238)
90,238
Division
Fund
Account
I Description
Amount
Planning (0301)
General Fund (100) 4120
Other Contractual Services
2,835
Total Development Services
2,835
Public Works
Division
Fund
Account
Description
Amount
Utility Systems Op & Maint. (0401)
Water Fund(510) 1726
Special Studies
(60,000)
Total Public Works
(60,000)
Capital Improvement Projects /Programs
Project Description
Fund
Source Fund /Prof. #
Amount
Water Corrosion Repair Water Fund (510) 510 -1760A
Water Conservation Program Water Fund (510) 510 -1167A
(60,238)
90,238
Total Multi -Year Programs & Capital Improvements
30,000
Attachment 2
7 of 14 October 21, 2014 Item #4.1
RESOLUTION NO. 14-
A RESOLUTION OF THE CITY COUNCIL, HOUSING AUTHORITY, AND
SUCCESSOR AGENCY TO THE POWAY REDEVELOPMENT AGENCY
OF THE CITY OF POWAY, CALIFORNIA
APPROVING AMENDMENTS TO THE CITY'S FINANCIAL PROGRAM
FOR THE FIRST QUARTER FISCAL YEAR 2014 -2015
WHEREAS, on June 17, 2014, the City Council of the City of Poway adopted
the Poway Financial Program for Fiscal Year 2014 -15; and
WHEREAS, a review of revenue and expenditure activity at first quarter end has
determined that certain amendments to the Fiscal Year 2014 -15 Poway Financial
Program are necessary.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway
that the additional appropriations and transfers attached hereto as Exhibit "A" and
incorporated herein by this reference are approved.
PASSED, ADOPTED, AND APPROVED by the City Council of the City of Poway
at a regular meeting this 21St day of October, 2014.
Don Higginson, Mayor
ATTEST:
Sheila Cobian, CMC, City Clerk
8 of 14 Attachment 3 October 21, 2014 Item #4.1
Resolution No. 14-
Page 2
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO)
I, Sheila Cobian, CIVIC, City Clerk of the City of Poway, do hereby certify under
penalty of perjury that the foregoing Resolution No. 14- was duly adopted by the
City Council at a meeting of said City Council held on the 21St day of October 2014, and
that it was so adopted by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
Sheila Cobian, CIVIC, City Clerk
City of Poway
Attachment 3
9 of 14 October 21, 2014 Item #4.1
Exhibit A
First Quarter Recommended Appropriations to City Financial Program for Fiscal Year 2014 -15
Operating Budgets
Legislative & Administrative
Division
Fund
Account
Description Amount
City Manager (0013) General Fund (100) 1110 Regular Salaries 3,230
City Manager (0013) General Fund (100) 1300 Benefits 1,520
Total Legislative & Administrative 4,750
Administrative Services
Division
Fund
Account
Description Amount
Human Resources (0101) General Fund (100) 1799 Other Professional Services
Human Resources (0101) General Fund (100) 4934 Recruitment
Finance (0103) General Fund (100) 1799_ Other Professional Services
Capital Replacement Equip (0108) Capital Replacement (611) 6122C Computer Software
18,000
46,000
5,000
20,000
Total Administrative Services 89,000
Community Services
Division
Fund
Account
I Description Amount
Old Poway Park (0205) General Fund (100) 4904 Community Relations 18,000
Recreation (0201) General Fund (100) 6199 Other Equipment 1,600
Total Community Services 19,600
Development Services
Division
Fund
Account
I Description
Amount
Planning (0301) General Fund (100) 4908 Education & Training
Land Development Eng. (0305) General Fund (100) }117 -99 — !Other Professional Services
Land Development Eng. (0305) General Fund (100) 13311 ICell Phone
Engineering Inspection (0306) General Fund (100) 1799�;Other Professional Services
Storm Water Engineering (0_308) General Fund (100) '4120 ?Other Contractual Services
Successor Agency Admin (0310) General Fund (100) 1702B Fees- Outside Attorney
Successor Agency Admin (0310) General Fund (100) 1702D -, Litigation - Outside Attorney
1,260
32AM
200
9,000
23,000
10,000
65,000
Total Development Services 140,460
Public Works
Division
Fund
Account
Description Amount
Public Works (Dist. across 13 divisions) 4120 Other Contractual Services 41000
Water Supply & Treatment (0402) Water Fund (510) 4120 Other Contractual Services 10,000
Parks, Trail & Landscape Maint (0418) General Fund (100) 4116 Landscape Maintenance 12,400
Total Public Works 26,400
Safety Services
Division
Fund
Account
Description Amount
Law Enforcement (0504) General Fund (100) 4120 Other Contractual Services 3,100
Total Safety Services 31100
Grand Total - Year -end Operating Budget Adjustments 283,310
Capital Improvement Projects /Programs
Project Description
Fund
Source Fund /Prof. # Amount
Veteran's Park Maintenance Veteran's Memorial Fund (777) 777 -1189A 10,225
Total Multi -Year Programs & Capital Improvements 10,225
Attachment 3
10 of 14 October 21, 2014 Item #4.1
RESOLUTION NO. 14-
A RESOLUTION OF THE CITY COUNCIL, HOUSING AUTHORITY, AND
SUCCESSOR AGENCY TO THE POWAY REDEVELOPMENT AGENCY
OF THE CITY OF POWAY, CALIFORNIA
APPROVING AMENDMENTS TO THE CITY'S FINANCIAL PROGRAM
FOR THE FIRST QUARTER FISCAL YEAR 2014 -2015
WHEREAS, on June 17, 2014, the Housing Authority of the City of Poway
adopted the Poway Financial Program for Fiscal Year 2014 -15; and
WHEREAS, a review of revenue and expenditure activity at first quarter end has
determined that certain amendments to the Fiscal Year 2014 -15 Poway Financial
Program are necessary.
NOW, THEREFORE, BE IT RESOLVED by the Housing Authority of the City of
Poway that the additional appropriations and transfers attached hereto as Exhibit "A"
and incorporated herein by this reference are approved.
PASSED, ADOPTED, AND APPROVED by the City Council of the City of Poway
at a regular meeting this 21St day of October, 2014.
Don Higginson, Chairman
ATTEST:
Sheila Cobian, CMC, Secretary
Attachment 4
11 of 14 October 21, 2014 Item #4.1
Resolution No. 14-
Page 2
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN DIEGO)
I, Sheila Cobian, CIVIC, Secretary of the Poway Housing Authority, do hereby
certify under penalty of perjury that the foregoing Resolution No. 14- was duly
adopted by the Members of the Housing Authority at a meeting of said Authority held on
the 21 st day of October 2014, and that it was so adopted by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
Sheila Cobian, CIVIC, Secretary
City of Poway
Attachment 4
12 of 14 October 21, 2014 Item #4.1
Exhibit A
First Quarter Recommended Appropriations to Housing Authority Financial Program for Fiscal Year 2014 -15
Attachment 4
13 of 14 October 21, 2014 Item #4.1
Operating Budgets
Development Services
Division
Fund
Account
I Description
Amount
Housing Programs (0309)
Housing Programs (0309)
Housing Authority (416) 17028 Fees - Outside Attorney
Housing Authority (416) 1799 Other Professional Fees
45,000
18,000
Total Development Services
63,000
Attachment 4
13 of 14 October 21, 2014 Item #4.1
General Fund Summary
FY 2014 -15 1 st Quarter Review
FY 2014 -15
FY 2014 -15
REVENUES:
ADOPTED
1st Qtr. Update
Adjustment
Operating
Property Tax
9,188,330
9,188,330
-
Property Tax - Allocation ABXI 26 Trust Fund
2,600,000
2,600,000
-
Admin. Allowance ABXI 26 Trust Fund
690,000
690,000
-
Sales Tax
12,387,930
12.387 930
Interest Income /Rental of Property
1,536,770
1,666,770
130,000
State Subventions
4,121,550
4,187,080
65,530
Franchise Fees
2,264,520
2,264,520
-
Fines & Penalties
144,000
144,000
-
Development Fees
1,512,030
1,512,030
-
Community Services Fees
1,873,870
1,873,870
-
Safety Services Fees
1,523,700
1,523,700
-
Transient Occupancy Tax
535,410
535,410
-
AII Other Revenue Items
374,130
374,130
-
Subtotal Operating Revenues
38,752,240
38,947,770
195,530
Non -Operating Sources:
Fire Protection Fees
625,000
625,000
-
COPPS Grant
100,000
100,000
Library Fund Interest Income
1,150
-
Grand Total Revenues
39,478,390
39,673,920
195,530
EXPENDITURES:
Operating:
Legislative & Administration
1,080,190
1,082,140
1,950
Administrative Services
2,136,357
2,183,108
46,751
Community Services
5,156,270
5,175,870
19,600
Development Services
3,754,656
3,894,351
139,695
Public Works
3,317,251
3,328,346
11,095
Safety Services - Fire
10,768,660
10,768,660
-
SafetyServices - ........................................ _
........................................._.........
...............................
._....._
Subtotal General Fund Expenditures
36,843,085
37,065,274
222.190
Street Maintenance
1,000,000
1,000,000
-
General Fund Operating Expenditures
37,843,085
38,065,274
222,190
Non - Operating Expenditures
City Office Building Debt Service
628,520
628,520
-
Facilities Replacement
357,300
357,300
General Fund Share - LMDs & Street Lights
356,950
356 91;0
-
Grand Total Expenditures
39,185,855
39,408,044
222,190
Net Operating
292,535
265,876
(26,660)
One -Time Distributions from RDA Property Tax Trust Fund
-
Capital Projects /Transfer to Trusts
(187,000)
Other Non - Operating
(25,000)
Net Change to General Fund Balance
80,535
53,876
(26,660)
14 of 14 Attachm 7 5 October 21, 2014 Item #4.1