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CC - Iten No. 2A - 2011-12 Budget Development WorkshopROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: JEFF ALLRED, CITY MANAGER DATE: MAY 10, 2011 SUBJECT: 2011 -12 BUDGET DEVELOPMENT WORKSHOP SUMMARY Since January staff has been working to present a balanced budget to the City Council for the upcoming 2011 -12 Fiscal Year. Currently the City's General Fund Reserves are $16,900,281, and as previously approved, the City still has a $644,548 GASB 45 payments due this year along with CIP projects totaling $471,618. Therefore, the projected General Fund Reserves for June 30, 2011 are $15,784,115, with an additional $1,933,644 to be paid towards the GASB 45 liability over the next three fiscal years. A detailed breakdown has been included as Attachment A. With these necessary one- time expenditures from the Reserves, staff has made every effort to minimize additional impacts to these funds. Input has been gathered from all staff members and the Council regarding programs and potential reductions. At the March 29 Budget Workshop the City Council provided informal approval on a number of proposed items totaling approximately $700,000 which have been included in the proposed FY 2011 -12 Budget. At the conclusion of the workshop a shortfall of approximately $150,000 was still projected and staff has been working over the past month to identify additional ideas to balance the budget while minimizing any negative impacts on the community. Since the March 29` workshop, the State has made additional cuts to their budget which have resulted an additional $100,000 reduction to the City through the elimination of the COPS program funding. This leaves a total deficit of approximately $250,000. Three new ideas will be presented to the Council tonight which could balance the budget if approved. These ideas involve the implementation of Administrative Citations through Code Enforcement, the sale of unallocated surplus Proposition A funds, and the temporary suspension of payments to the County's Liability Trust Fund. Staff Recommendation That the City Council provide direction regarding the development of the 2011 -12 Fiscal Year Budget. ANALYSIS The City Council has provided informal approval on twenty -two items that were discussed at the last budget workshop. These items have been listed on Attachment B. Some of these items will be presented for formal approval as part of the Fee Resolution tonight and the remainder will be incorporated into the work plan and will be approved as part of the budget document. ITEM NOS 2, APPROVED FOR CITY COUNCIL AGENDA: City Council Meeting May 10, 2011 Paae 2 of 3 Three new items are being proposed this evening in an effort to balance the budget 1. The first item involves a shift in how Code Enforcement citations are issued. Currently Code Enforcement Officers issue a warning for a violation, which is followed by a misdemeanor citation if voluntary compliance is not received. The misdemeanor citation is turned over to the City Attorney's office for prosecution or until the desired compliance is made. While this process has been successful in improving the community and gaining compliance, the City's legal costs have increased and the burden on the judicial system is becoming greater. Furthermore, the City is rarely able to recoup its costs due to the minimal penalties imposed by the courts and the withholdings are kept by the court system. As a result of all this, staff has been investigating alternative options and have identified a possible shift that has been successful in numerous other communities. In lieu of issuing misdemeanor citations, administrative citations would be issued. These citations would be processed by a 3 rd party consultant and City staff would handle all the compliance issues. By using this process, the City is able to set the fine amounts and the cost of processing is fixed through a contract with the vendor. Staff will be proposing fines ranging in amounts from $100 to $500 along with an administrative fee of $15 for processing. Well over 100 cities in California utilize this process as well as some neighboring cities such as San Gabriel and Temple City. Furthermore, the administrative citation is generally viewed to be friendlier as the City is not immediately pursuing a court case and a misdemeanor conviction. Staff has projected a combined budget savings in the first year of $40,000 in reduced legal fees and new fine revenue. 2. The second new idea is to sell some of the City's Proposition A transportation funds to another agency in exchange for General Fund revenue. While the City traditionally spends most of its Prop. A and C funds on transit related programs, a small annual surplus each year is typically realized. This has resulted in up to $300,000 of surplus Proposition A funds being available for sale. While this balancing measure would only be a one -time solution, it would assist in balancing the budget. It appears from other Prop. A fund sales being offered throughout the County that the City could expect to receive seventy cents ($0.70) to seventy-five cents ($0.75) on the dollar. 3. The last balancing measure is an idea that has been proposed by the California Contract Cities Association (CCCA). CCCA has completed a valuation of the County's Liability Trust Fund and it has been determined that the LTF has sufficient funds to suspend contributions for up to one year. The City currently is required to pay 4% of all contracted service costs from the County into the LTF. A formal request has been submitted to the County by CCCA and staff has been informed that there is an excellent chance that the County will approve at least a six month suspension of contributions to the LTF. If a six month suspension is approved, the City would save $115,000 next fiscal year. Just as the proposed sale of Prop. A above, this would be a one -time balancing measure, but would allow the City to maintain existing services without additional cuts to programs. City Council Meeting May 10, 2011 Page 3 of 3 PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Prepared by: ry � S Matthew E.Hawkesworth Assistant City Manager Attachments: A — Estimated Fund Balance B — 2011 -12 Budget Development Overview Attachment A City of Rosemead Estimated Fund Balance June 30, 2011 Current Operating Fund Balance Budgeted Fund Balance Uses: CIP projects: San Gabriel Blvd. Pocket Park Hellman/ Stallo Pocket Park Sally Tanner Park Playground Surfacing Centralized Irrigation Control Program City Hall Generator Replacement Playground renovations - Klingerman Park Subtotal FY 2010 -11 GASB OPEB contribution $ 30,000 30,000 23,760 7,000 350,000 30,858 Subtotal budgeted fund balance uses prior to 6/30/11 Estimated Fund Balance as of 6/30/11 Less future obligations: FY 2012 -14 GASB payments Balance of CDC loan repayment Subtotal future obligations 1,933,644 2,026,302 16,900,281 471,618 644,548 1,116,166 15,784,115 3,959,946 Estimated fund balance (less future obligations) as of 6/30/14 $ 11,824,169 Attachment B 2011 -12 Budget Development Overview Initial Project Shortfall 870,000.00 State eliminated funding of COPS 100,000.00 Total Shortfall 970,000.00 Council supported balancing measures 1 Deploy Special Assignment Deputies to cover one 8 -hour partrol shift per week 248,000.00 2 Suspend Tuition Reimbursement 25,000.00 3 Reduced Auto Allowance 13,500.00 4 Reduce Recreation Brochurse /Newsletter to 3 issues per year 10,000.00 5 Distribute Calendars per request only 4,000.00 6 Allocate Bus Shelter maintenance to Transit Funds (Prop A, C and Measure R) 58,437.00 7 Eliminate vacant 3/4 -time Recreation Leader position 28,998.00 8 Increase Parking Fees from $23 to $40 (Still below surrounding cities fees of $42 -$50) 100,000.00 9 Overnight Parking Permit for Commercial Vehicles 2,000.00 10 Closure of RCRC during remodel 61,852.00 11 Reduce P/T Maintenance Hours 29,618.00 12 Reduced banking fees 5,000.00 13 Reduce various Public Safety line items 1,200.00 14 Reduce P/T Hours in Administration 17,908.00 15 Reduce funds for special projects 4,000.00 16 Reduce P/T Hours in Parks & Recreation 34,906 17 New Planning related fees 2,000.00 18 Require Adult School to perform their own room set -up and clean -up 15,000.00 19 Discontinue fee wristbands for aquatics 3,000.00 20 Increase facility use fees for non - residents 2,000.00 21 Picnic Shelter rental fee 1,000.00 22 Will receive additional Prop. A County Parks funds 40,000.00 Total Supported Changes 707,419.00 New ideas for consideration 1 Implement an Administrative Citation process in lieu of taking all non - compliant Code 40,000.00 Enforcement cases to court. This would save us in legal fees and generate improved cost recovery over Court Fines where the courts and the State take most of the fees. 2 Sell up to $300,000 in Prop. A funds to another City for General Fund money 210,000.00 3 CCCA has sent a letter to the County requesting a one -year suspension of the 4% 115,000.00 contribution to the Liability Trust Fund for LASD Services. If approved would result in this savings.