HomeMy WebLinkAbout0499.092Novembar 5, 1992
THE HONORABLE CITY COUNCIL
Palo Alto, California
Attentiont Finance Committee
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1991-92 YKAR-E!ID prNANCl:AL SUMMARy ICAP1_~AL IKPROVEMENT PRQGRJ..K
COrp) FINANCIAL STATUS REPORT NfiLJ3UOGET CLOSING
Memhers of the Council:
Report in Drief
The following report compares the results of ths City's Gene4al
FUnd and Enterprise FUnds operations to the adjusted budget far the
1991-92 fiscal year. The report also provides an update on the
major budget policy issues identified in the 1991-92 Midyear
Financial Report (CMR:154:92) and the 1992-94 Budget (CMR:235:92}.
Th.e Comprehensive Annual Financial Report (CAFR), which 'Jill bE".
published in December 1992, ,-·ill contain all the actual financial
results for fiscal year 1991-92. The focus of this report is on
budget-to-actual variances, which is a slightly different basis
than the CAFR~ since this repcrt takes into account encumbrances
and reappropriations. The CAFR 'Jill also reflect any subsequent
adjustments made by the city's external auditors, coopers ,
Lybrand.
Just prior to the final printing of this report_ the State Board of
Equalization informed the City that it has an estimated $1.1
million liability for sales tax rebate under the A~_rosp_ace
decision. Staff has included a separate informational report
(CMR:501:92) in this 'lfIiee}c's Council pacy.et on this is.sue.
Staff recommends that Council adopt the attached Budget Amendment
ordinance (BAO} and reappropriations, officially closing the 1991-
92 budqet.
CMR: 499: 92
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overview
As a result of a $1.0 million favorable variancEs ir. .r-e:venues and a
total $4."J !!lillion favorable variance in expenditures, total
General Fund operating results for 1991-92 yielded a substantial
operating su't"plus. Whereas the Midyeal-Report proj ected an
operating deficit cf $1.0 million, total revenues act:.;ally exceeded
total expenditures by $4.7 million~
Gene~al Fund revenues for 1991-92 ~ere higher than expected by $1.0
mjllion, or 2 percent, mostly in sales tax. due to one-time
reallocations of $O.S million incorrectly credited to other cities.
On the expenditure side, a n~er of favorable actions--sQme of
which were also of a one-time nature--combined to hold down total
actual expenditures below the budgeted amount. The o::redit from the
Public Employees Retirement system (PERS) in connection with AB702
was $2.2 million for the General Fund, so actual expenditures for
salaries and benefits w~re beloW" budget by apprcximately that
amount. (Since AB702 is still the subj.zct of litigation j st.aff
continues to reserve the entire amount of the General Fund credit
separately from th~ Reserve for Capital projects. Similar reserves
have been set. up for the Enterprise Funds.) In the non-salary
6~penditure category, a co~bination of recession-induced low bids
on majcr contracts, tightened purchasin9 controls, diligence in
reducing the amount of reappropriations and encumbrances to the
next fiscal yea!:', lo,,"er citywide general liability self-insurance
expenses, the impact of the drought (which resulted in lo~er tree
and storm drain maintenance costs, and less need for plantinq
:materialsj, all yielded significant savings with respect to the
budqet --$2.4 million in total.
The Reserve for capital Projects ... ·ill therefore increas.e $6.0
million as a result of this operating surplus, and because of
shifts in other General Fund reserves. The balance of the Reserve
for Capital Projects, $11.4 million, is up from $5.4 million a year
ago. With respect to the recommended General Fund Res~rves Policy
(CMR:487:92) , the level of the Reserve for Capital Projects noW'
represents 17.5 percent of actual 1991-92 General Fund expendi
tures. which is '\iithin the recommended range of 10 percent to )0
per::.ent. The total of all General Fund reserves identified as
"discretionary" in the General Fund Re:serves Pol icy is $:'9.5
million, which represents 30 p24cent of actual 1991-92 General FUnd
expenditures.
utility user tax revenues were origina.lly expected to exceed
expenditures; however, actual revenues 'Were slightly lo~er than
anticipated. Therefore, the Reserve for Streets and Side
~alks/School site projects has declined by $147 1 0DD r to $485,000.
Enterprise Funds revenues ~ere $2.1 million short cf budget
projections. However, savings in every expenditure category,
especially utility purchases in the Electric Fund, totalled $20.0
CMR:499:92 2
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million, so 'that reserve balances increased substantially mere than
had been anticipated. A sep<lrate staff rE:'port, which will be
age.ndizeo for the November 17 Finance committee meeting, 'Will
address in detail the large variances in the Electric Fund.
Finally, a section at the end of this report describe~ so~e policy
issues affecting the future of the General Fund.
All n~rs in this report are in thousands of dollars.
GENERAL Ft1HD REVEXOE~
Sales Tall:
Adjusted Budget
$13,935
Actual Variance.
$14 1 692 $757
Sales tax receipt~ ~ere more than 5 percent higher than projected
in the Midyear Report. ~wo-thirds of the favorable variance of
$757,000 is due. to State Board of Equalization one-time realloca
tions to Palo Alto of taxes erroneously credited to other cities.
The other third is due to higher-than-projected taxable sales,
despite the sluggish econo~ic recovery. Total sales tax gro~h in
J.991-92 from the pr-evious year vas 3.9 percent; compared to d
projected decline of 1.4 percent.
property Tax
Adjusted Budget
$S,395 $8,555 $160
Property tax receipts .... ere slightly above the midyear projection.
Slightly higher uns~cured property taxes accounted for most of the
variance. ~s a .hole, propert~ tax2S increased 5.5 percent from
1990-91, compared to a projected 3.2 percent increase.
Utility Users Tax
.Ad; uste_g ___ ~l,.l_9get Actual Variance
$5,230 $5;148 ($82)
Utility Users Tax revenue came in just below budget. Although a
modest growth in phone revsnues was budgeted, those revenues were
essentially flat compared to 1990-91.
CMR:499:92 3
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O:"OURTH QUARTER t1N,'\NCtA-L SlJ}...f1...tA..'1?
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GENERAL FlTND
REVENUE A..'ID E-:X'PEN1>nURE Sl'f'l-of."M.R Y
(in thousands of dolllOfs)
Yet;! Et.dcd June:: }n, 1992
A.1justed AcIUIIl ... Vanance y", Eodc.!
Budget E~wnb, ... F.&I',\')fI'lble 6!~0I91
1991-91 ~ (1Jnf.fI,~ A,,",,
l!"'~'"
T&x~
Sala ""'" 1),935 1-1,691 7S 7 1<1,!4O
Pmperty tax~ ll)95 8,555 !60 11,1 ()9
IJ'ljl:ity User TILl!; 5.2~O 5, 14~ l82,1 4,9W
TransIUlt 0ceUfA'Ul'CY Ta\ US{) .3,IQ4 (146) 2,969
O;hcr tp)c£:S, fmes, and peoaltie3 L'!!.~ J.,1.?'il {j.1i) lin
S"btota]: Tues 5 14.115 134,1158 SM) 5:13,824
SeMoe fees.t; pemits 6,577 6.533 l441 t:,i69
Joint Service ~ts
('_ tlnivomty) .3,9JI :),9m l24) 3,501
Ioten:st earnings 2,008 1,:)61 55 1.919
au." """'_ 2~ U~ .. ~ JJi ~.!.,s.I~
ToW_ ~9,l"9 J:S<l,246 $%7 S<lB,05~
Plus Reappropriallons &.
Eocumtnnccs from Plior Yf;1J1 2,592 2,592 0 4,3B
Pia! ~ Tl'1IrlSfers In l1Lf.J.:! L.s.6) .. ~ 1] L@l
TOTAL SOURCES OF fllNDs $68,4N.5 S69,4'" , .. , 566,Jn
~.~.t,ljt\l~
Sslarics Ii.. Benefits 45,110 41,0'-"'; 1,016 40,28}
Contract Sa-vi.ca. i,056 5,9'l) ~ ,(Ii 3 6,48~
Supphcsol-~;: lJiJ4 :U71 213 2,209
a-aJExpo= Y,062 !L5&:S 47" "/ ,]25
Rents, l..eases, 4: ~ulpment t ,4n 1,327 9(, IY"
AJlocated Cbatg=s (Ne1) '" 3:;9 ~ .~IJ 311]
ConhngeoclC's 17:1 Q J]1 0
Total EJ(peMltures Sf'5,917 S61 5~~ S-U~I.5 .557,9&7
Plw. Operati.t\€ TnltlSfm Out 1.~5J J.,t5.~ 2% Lh~.1
TOTAL USES or FUNDS ~'H~ ~2.~.'-~....@! ~i~9
Net Oper'ltigg SlirpTuil
(Dendt) fS99J! S-l 6113 ~U!i Ul!!
l!ttPUf: 011 Reserves~
Resetve for Capital Proj«:ts 1.2::1.1 '5,(j;t> i,1 ,136!
Rc:scrw f« StreeISlSidevr.'a11.:~ { 14:": ::/;1
AJ¥opria1ed for SU-eet5ISide""311.:~ :'95
~ for Chioer.t.l Contmge:oc:ies 0 0 0
Sl~ Inv!:ntury (67) 6:!f
AilIItWOCS 10 Other Funds t2,210) (2-.120) 57 ~
R~ for _a.B702 1,lM
kesen.oe for Noteo R.:ceiv.ob1c 1.410)
TOTAL TO (FR01l.f) RESER YES (S99J) '$4683 !ill
CMR:499:92 4
Transient occupancy Tax
Ad)'usted 'Budget Actual Variance
$3,250 $3,104 ($14 6)
Revenues from this source .. erP.c 4.5 percent belo\;! the midyear
projection, but 4.5 percent above the 1990-91 leveL Hotel
occupancy rates slumped a bit in the second halt of 1991-92,
accounting for the lower growth than the 9.S percent previously
forecast~
ether Tazes, Fines and penalties
Adjusted Budget Actual Va.riar,ce
$3,405 $3,359 ($46)
Revenues from motor vehicle f~es and the real property trans~er
tax. which comprise most of this category, ..... ere close to the
budgeted amounts.
Adjusted Budget Actual Var-iance
$6,577 $6,533 $ (44)
service !"ees and Psrmi ts revenue was very close to the amount
budgete~. Positive variances occurred in the Fire and Planning
Departments. Projected revenue shortfalls in the Community
services and Police Dapartments offset these variance::;. The
significant variances are outlined belo .... :
• Fire Department: Paramedics Revenue -Actual revenue 'Was
$108,000 over the adjusted budget of $535,000.
• Planning Department: Higher than budgeted plan checking
revenue was experienced in the Planning Department ($140,000).
• community Ser-vicE':s Department: A $258,000 reovenue shortfall is
a consequence of lo .... 'er class enrollment because of the
recession and fewer classes due to one Recreation supervisor
position vacancy.
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• Police Department: Alarm Fee revenue ~as $50,000 below budget
because of f£wer billable alanns. Emergency cost Recovery
revenue ~as also lo~er ($56,000) due to a chanqe in policy
regarding th"a fee assessed on drivers who are cha:t:ged \oI'ith
Driv4'l9 Under, the In~luence (DUl)., presently, ~ fee is
charged only ~f an accldent is also lnvolved. Prev~ously, a
fe.e vas assoossed against all persons .... ho were charged with
driving ~hile under the influence of alcohol.
Joint service Aqreements
Adjusted Budget A.ctual Va!'ianc~
$3,931 $3,907 ($24)
Stanford reiDtbursements tQ the City tor Fire and communications
services were just under budget due to a billing adjustment for the
prior year.
Adjusted Budget A.ctual Varian"
$2,008 $55
Interest rates .fell further in the second half of 1991-92 than
staff had projected, but higher cash balar.ces in the Gener-al Fund
meant that the investment portfolio was large enough to generate
sliqhtly more General Fund interest earnings than expected.
COZIpared wit.h 1990-91, interest earnings grew 7 ~5 percent, as
larger cash balances !!lore than compensated for declining ir,terest
rates.
ot!:l.er Revenues
Adjusted Budget Variance
$2 I 548 $2,885 $337
Durinq 1991-92, rent_al payments from one of the City'S major
lessees 'Were switched from an annual schedull:! to a quarterly
schedule, ~hich resulted in five quarters of payments on a cash
basis.
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eperatinq TranBt.ra In
A.djusted Budget Variance
$16~632 $18
The slight variance ~eflects higher transfers from the Gas Tax Fund
for reimbursements for eligible congestion management expenses.
GERERAL rtmp OPERl.T:nm EXPENDITURES
The discussion and ar.?lysis which follow include. encumbrances and
reappropriations in rne actual amounts shown on the Fourth Quarter
Financial summary for the General Fund. It is important to note
that this is a different mode of presentation than that used in the
CAFR, since the CAFR does not recognize encumbrances or reappropri
at ions as expendit~res~ Hovever, their inclusion is necessary for
an accurate bUdqetary analysis of funds spent or committed to be
spent in the future.
Salart •• and Benefits
Mjusted Budget variance
$45,110 $43,094 $2,016
The major contributor to the General Fund savings was the AB702
PERS credit of $2.8 million, of which $2.2 million applies to the
General ?und.
contract Services
Adjusted BUdget
$7,056
Actual
$5,923 $1,073
Contract Services in the General FUnd realized a savings of $1.1
million~ The major savings occurred in the following ~rea5:
• City Attorney's Office: The City Attorney's Office saved
$126,000 in contract legal services far two reasons. First,
there 'Was increased use of student law clerks instead of
outside counseL Secon.d, the Attorney's Office requested
reappropriations for Kemper litigation, the Shoreline noise
monitoring project, and the possible use of outside counsel in
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conn~ction with ~ water rights analysis and opinion. Because
of year-end savings in the City Attorney's office over the
last few ye-ars, the City Manager'!: Office is not recommending
a reappropriation tot:" these it.ems. 'I'he City Attorney's Office
concurs in this recommendation, but notes that the aroour.ts
proposed for reappropriation were anticipated during the
budget process. Accordingly, should expenses increase this
year, a Budget Amendment vi!l be necessary during 1992-93.
• Finance Department: A fixed assets project was not initiated
in the Accounting services Division of the Finance Departtlent:,
Which saved $65,000.
• Public: Works Departl,ent: savings ...-ere realj zed in the
Operations Division, where $464,000 was unspent in a tree line
trimming contract v~th the utilities Department. The savings
resulted from 1~ss growth due to the six-year drougot.
• community Services Department: Two different areas were under
budget in the community Services Department. $52,000 was not
used in the Recreation Division due to lower class enrollwent
and fewer contract classes offered because of a position
vacancy; and $56, 000 was :saved on park maintenance in the
Parks and Golf Course Division.
SUpplies and Kateriala
Adiuste_d Budget
$2,384
Actual
$.2,171
variance
$213
Supplies and Materials expense was 9 percent lower than budgeted.
The variance included construction material savings in the Public
Works Department because of fewer required sidewalk and storm drain
r~pairs ($119,000) j and in Ccro~unity Services because of a
reduGtion in tne use of planting ~aterial due to the drought. In
addition, there were savings i~ the Public Works Facilities
Manage.ment Division of $38~ 000. This 'Was due to a shortage of
personnel to complete electrical and plumbinq repairs.
General Expenses
Adjusted Budg~...t Variance
$9,062 $8,588 $474
'The majority of the favorable variance in General Expenses is due
to the citywide decrease in general liability costs ($286,000).
CMR:499:92 8
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ot.her savings in this category were realized in the Police
Department ($52,000) for lover than budgeted bad-debt expenses for
false alarms and DUI blllings; a:1d county jail booking chat-ges .. ere
lower than anticipated ($44,000). In the Hu~an Resources Depart
ment savings occurred in relocation expenses '$3',OCO).
R.nt~, L •• a •• an~ Equipment
Adjusted Budget Actual
$1,423 $1,327 $96
The positive variance experience.d in this category was due ma~n.1:r
to savings in the rent and lease of outside vehicles and equipment
in the Storm Drain Program. These savings occurred because of the
drought and fewer necessary repairs to the storm drain system.
allocated cbarqes (Net,
Adjusted BUdget .a.ctual Variance
$719 $369 $350
Allocated Charges realized a nat. savings due to higher-thar,
anticipated 'Water conservation levels, in combination ~ith a one
time credit adjustment based upon a reviev of baseline consumption
allowances (SCA} for City facilities~ staff plans to review BCAs
for City facilities agai!·,.
jt.djusted BUq._~ Ao:tual Variance
$173 $0 $173
The balance in the Contingency account reflects unspent funds from
the City Manager's non-salary contingency.
_ ••• rves
The net operating surpl-..:.s in the General Fund resulted in a
siqnificant increase in the Reserve for Capital Projects. After
the transfer f:t'om General Fund operations, the remaining balance in
the Reserve for capital Projects is $11.4 million:
CHR,499,n 9
Bala'!1ce 7/1/91
Projects Reimbursed from Other Sources
Closed CIP Projects
From General Fund operations
Balal'1ce 6/30/92
1m
:Di.scretiooary Resen'e:;;:
lttaelYe for Capital Projects 11,~S
~ for St:l"et'!s and Side:.wIks1 485
~SiIePro~
Ilesc:lve fur Gener:at Contingencies 5,000
Advmces to Otba-F@d.<;: 447
R.cieIve for AB702 Credit ~
Total Dlscretiooary Reserves. 19.463
Noa-DUcretionary ReseJ'VCli:
Reserve for Encurobrvx:es/Reapprop. 3,7£3
Reserve for fnveotory L~.l
,. otal Nou-Discreti o .... ry Reserves :!'-~Q~
TOTAL GENERAL FUND RESERVES 24,268
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CMR: 499: 92 10
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$5,415,031
778,296
95,432
5.076.450
$11,365,209
Inc"",
~I
lW from 1m
S.41ji 5,951)
631 (147)
5,000 -0-
2,667 (2.22Q)
.0-~
13.714 j,749
4,006 (243)
LlQ2 l§]}
L.I.il 1ll0)
lS,82Sl 5,439
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tuRTH QUARTER FINANCIAL SU~~~Y
ENTERPRISE FUNDS
REVENUE AND EXPENDITURE SL'MMARY
(in thousands of dollar;)
Reyen~
Total Sales
Other IDCome
Tctal Revenues
Plus Reappropriatlons &.
Encumb:2nCeS from Prior Year
TOTAL SOURCES OF FUNDS
E.mrpditum
Utility Purchues
Other Elpenditures
S.alari83.. Contract,
General Expe~. Etc.
Total Operating Expenses
Ptus Operating Transfers Out
T otaJ Expenditures
Capital Expenditures
R~ymeDt of Advance from GF
Principal Pay ments ~ Bonds
TOTAL USES OF FUNDS
TOTAL TO (FROM) RESERVES
CMR:499:92
Y~ar Ended june 30, 1992
Adjusted
Budget
lWI·~
I 19 ,(A()
15,854
1135,494
12.288
$151,482
58,J79
45860
$104,239
16,SL'l
SI2l ,058
:!6,733
I,no
.ill
$.tSQ.;!J9
W.:!.l
11
-<,':.
Actual +
Encumb. +
~IW
117,663
15,693
1133,356
1~88
5149,344
46,545
illn
$87,667
~19
5104,486
23,298
1,720
7~
~2Q2
H2.lli
Variance
FavorabJe
(lJl)f;!;_vor. )
(1,971)
(161)
($2,138)
Q
($2,138)
11,834
UJ8
516.572
Q
5'6,572
3,435
0
~U
S20,O~
rn.m
Year Ended
6130/91
ACttJ~!
110,109
11 ,511
$121,620
Q
5121,620
52,254
~-,-~_2-'Z
$88,581
15337
5103,918
13,7{l,\
0
J...1Q!;
$!lM32
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BlI'l'ERI'RISI F!!!!llS REVENUe AND EXPElIS! s~
Adjusted Budget Actual Varianc;S!
$lJ5,494 $1)),355 ($2,138)
The Entert-'rise Fl.;.nds revenues were only ~ ~6 percent below the
projections. However, compared with fiscal 1990-91, these revenues
grew by $11/7J~,OOO or 9.~ percent. The net proceeds of $4,581,000
from the new Storm Dr~inaqe Fund bonds were a large factor in this
increase. Actual revenues by fund were as follows:
Adjusted Budge:a Actual Dollar l'e<""t """""" E!!!l!! ($000) I}OOO) Varianu ~ 1~'ll
Electric 71,932 71,586 (34<5) .{).S~ 69,391
W.",. 10,8'97 10,756 (141) -1.311-9,547
()" 18.1,6!! 17 ,064 (1,104) -6.U, 18,196
WastwIat« 14.724 14,568 1156) -LJ '\{, 12.093
R,","" 13,382 13,028 1354) -2.6 II-10,641
S<onn D<aimp ~ .....ua .....f1Z.i ..o.S It ..J..ill
TaW sm,.94 5133,356 (2,13') -1.6'1 $121,620
The water sales hudget was adjusted down~ard in the Midyear Report
by $1.7 million to reflect higher conservation by Palo Alto res
idents and bU5in~sses due to drought-related rate increases. Actu
al sales were still below projection because water consumption by
City departments decr.eased with heavy rain in the 'Winter months and
use of reclaimed water in the City's parks. Gas sales were also
lower because of I!',ilder temperature in the ""inter months. In the
Refuse Fund, with a 30 percent rate increase, some City residents
cut back to single bin service resulting in a low~r s.ales vol
ume,
Utilities Purehases
Adjusted Budget Actual Variance
$58,379 $46,545 $ll,8l(
Savings in Utilities Purchases were realized due to significant
savinqs in the Electric and Gas Funds. A seperate staff repor~.
which will be agendized for the November 17 Finance conrali ttee
CMR:499:92 12
meeting, .il1 address in detail the large variances in the Electric
FUn~. Briefly, the wholes~le ~ost of electricity ~as lower than
the adjusted budqet due to a variety of ci.rcumst~nces. These
include a credit from Western Area Power Administration because of
a rate adjustment clause ($1.26 million); a rafund from PG&E due to
the ~est~rn and Pacific Gas and Electric Wheeling Settlement ($1.0~
.million); a decrease in capacity rate from western for t~o months
($1.78 million); sale of surplus resources from the calaveras
Hydroelectric projact to the Cit}, of Roseville ($3.56 million) i
savings due to power pooling ($.82 1!lillion); sale of reserve
capacity to Tl.;.rlock Irrigation District ($ .15 million); energy
reservation fee due to a surplus of power refunded from Northern
California Power Association (tlCPA) ($.15 million); and an
additional savings due to unanticipated p..conomies in purchases
($1.42 million). The total purchase savings in the Electric Fund
is $10.17 million.
There was an additional $1.66 million savings in the Gas Fund due
to purchases o~ qas from an alternate supplier at a lower price
than the published price the budget ~as based upon and due to a
general decline in market commodity costs.
other bpenses
Adjusted Budget Actua 1 .Y_~.riance
$45,860 $41,122 $4,738
Savings in the Other Expenditures category were realized for
several reasons. Salaries and benefits were $Q.46 million under
budget because of t~e AB702 PERS credit and infrastructure program
vacancies in the Water and Gas funds.
There were savings in the Contract Services category of $1.25
million d:ue to a decrease in w'ater conservation efforts. There .. as
also less attention than planned on Electric Demand Side Management
proql"ams, which usually rely heavi ly or. contract assistance. In
addition, the Environmental Protection Agency mandates which would
have utilized Contract Services in the Refuse Fund have not yet
been implemented, and the funding of these programs has been
returned to reserves. Finally, negotiations with the ltegional
water Quality Control Board concerning requirements for monitoring
of the San Francisco Bay have allowed the Wastewater Treatment Fund
to reduce and consolidate the monitoring efforts performed through
contract agreement,
There were significant savings ($1.4 million) in the General
Expense category, Savings in the Electric Fund resulted from the
delay of the Santa Clara Fuel Cell Demonstration Project
($328,000). This funding has been returned to reserves to be used
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when the project becomes ~ctive. In addition, there were savings
in NCPA Support Service~ charged in the Electric Fund ($~24,OOO) as
the Nt:PA's projection ..,as agairl on the conservative side, but
difficult to anticipate. The remaining savings in Genera 1 Expenses
is due to debt service principal retired ($728,000) ~ Bond
principal payments were included in the operating budgets in the
Enterprise Funds to allow for accura~e calculation of the
appropriate rates~
Savings ir. Allocated Charges 'Were attributable to a decrease in
Utilities Administration actual expenditures, which are spread to
the various enterprise funds ($46~,OOO).
CMR:499:92
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£mH~tt Pillffl. 'll£f'a:<':d~l )(j) \,SH ,,6 1,000 ),912 ),67")
Sy()m» bnptvvemM.l tlesetl\'-:t 1'l'l 9,M2 .rr,JJb ),6311 4,046 J,55J 2'),41'-\9.131-
R~~ ~~.M~"m $l:l\~Tl'C 448 n,'J9.2 ~.S:J» 21,W 11.)00
C.!'Wtu~:;o K~IO' I6.S00 1Ji,IOO 29,206
~.1IIrHilW:',fi:'l'~·'~I~', \' ",. .'
(;.~ ~aS Sum <,1)$3 4,U11 ~,nJ
lX~ WT>';<:!' ${~""'b 5' fjb 'Ib 54! 557
U~\;!f~~ t>WI Rl'IWln't'-...., ... 413
C~~SIt.N~\oo Lt»m «~~" 51:! 5rt m
t;~Nt. h)f f'£RS ~~hMl! 50 n~ ~3 1"1 3(J 11 S1. .(!.. (:)~ '*~~,~jA't' ',~/::1-.~;>'-$_ ~
; , l..t.mmll ~~-eJfA»1e 't'~t' 1.171 I,llt ".
EJM·!r.»»N:MF{~ :...mS Rl'.arrm-t;~m~ ,~.!S ... i,:}51 2,49) J,676-},,99 ",J% IS,9"
.'~ ''1'''-",' f'fU,h.'mll
U~1ii\1""?f. E " t, -:"'-'~/ , ',n'it ,; -;A'\ ,\1 ", .b1'\!"l-*i',~ ~\{;. .,'
TJ:o»J Ri?w-n>~ 3.m 68,1,39 jJ,693 1:16'1 6,943 4-" 'If-4 ~1)4.5:)1 U.2t:;.
CMJ;;:499:92 15
o
JDterpri.. lund R"'~
The reserve increaaes were the net result of expenditure savings of
$20.0 million offset by lower revenues of $2.1 million.
OVerall reserves ~emain healthy in all the E~terprise Funds except
the Water FUnd, where the continued drought is still exerting a
neqative impact. The Wastewater Collection Fund is doing better
than prior years, as cost savings and rate increases ar~ contribut
inq to ~ strengthening in reserve levels. Electric Fund reserve
levels are significantly higher than targeted levels. This will be
explained in depth in a separate staff report.
The following schedule reflects the SIR (Systems Improvement
Reserve) and RSR (Rate Stabilizativn R~serve) balances for each of
the appropriate utilities, along with the minimum and maximum
le.vels establishe~ b~' Counci 1 for each fund's reserve.
1991-92 Minimum Maximum
Balance Balance Bal.sonce
[$000 I ---L0Q9-.Ql ($000 1
Wat~r: SIR $ 199 $ 951 $2,400
RSR 448 1,599 2~674
Gas: SIR 4,336 2,311 4,622
RSR 2,820 1,713 3,707
Electric::: SIR 9,652 4,236 8,471
R5R 23,992 6,725 13,183
Refuse: SlR 4,046 2,100 4,lCO
IiI< Coll. : SIR 1.159 1,200 2,400
WW Treat. : SIR 2,479 500 1,000
Storm
Drain: SIR 3,553 2.010 4,020
CMR:499:92 16
l..QJ.ic:y Issue!!
AerospaCG D.cision: 88 "2
As detailed in CMR;425:92, the City has a ne""found e:xposure to
sales tax rebates as a result of SB992, which relates to thE 1990
court decision in the Aerospace corpor~tion case. Just pri __ ,r to
the distribution of this report, the state Board of Eqllalization
informed the city of an estimatej $1.1 million liability for the
Aerospace decision. Further information has been provided in
CMR:501:92.
Impacts o~ tbe Recession, state and county Bu4qets
While many national economists claim that the U. S. recession is
technically over, the econo~ic 5ituation in California is clearly
still bleak, and some of that slowdown continues to affact the Bay
Area. Sales tax receipts, which account for nearly one-fourth of
Gener~l Fund revem':'E:s, haVE: been restrained by soft ret:.CI.il sales
and bUsiness purchases. The 1991-92 sales tax growth rate of 3.9
percent was achieved only because of half a million dollars that
had oriqinally been credited in error to other cities. The utility
user tax carne in less than projected, as did the transient
occupancy tax. Preliminary data for the summer appear to show a
slowdown in residential property sales, which will serve to dampen
revenue from the real property transfer tax.
The state budget agreement, detailed in t~o recent staff reports
(CHR:425:92 and 455:92), will take one to one-and-a-half million
dollars annually from the city's General Fund. Fortunately ~ recent
reductions in the PERS contribution rates and savings from th-e
City's switch in health plans should offset theRe reductions. And
the general strengthening ~f City reserves in 1991-92 will help
preserve the City's financial health. Howeve.r, ii the receSSlon
continues to the point that the State and C0unty budgets contlMue
to be volatile, :lore such economic blo· ... s may be felt.
Americans with Disabilities Act (ADA)
The estimated d~llar cost from 1992-93 through 1994-95 tor
complying with the provisions of the ADA is $0.8 million. 'lhe
first-year funding 'IooIill come from the A01'-. Capital I:rnprovcl:"1('r.t
Program and Public Works operations budget. The second and thIrd
year recommended corrective actions will be re-evaluated after the
City's self-evaluations are completed in January 1993; the
necessary funding loIill be incorporated into the Capital Improvement
Program or appropriate operating budgets for Council approval .as
part of the interim budget process next year.
CMR:499:92 17
..
•
.ff·
Health Care costs
'The rising cost of health care for em.ployees has been a part of the
national agenda for the past decade. !n an attempt to control
these high costs, the city has just completed its enrollment period
for employees under the PERS-adlllinisteced sj'stem. The exact dollar
effect of this s'Witch from the City's previo\.!:s self-insurance
health plan is difficult to project. .As is common with self
insured programs, actual c;laims paid out have deviated widely (rore:
year to year, so future savings can only be estimated. However,
with PEMHCA plan premiums being tightly negotiated by PERS on an
annual basis, this benefit change is an example of how the City can
lower its risk ~nd reduce exposure to unanticipated cost swings.
A8702 PEaS Credit
As reported in numerous staff reports over the last year, the $6
millior: PERS credit from AB702 is still in Ii tiqc:tion~ and t:{lUS is
still reserved in the appropriate operating funds. If the litiga
tion is resolved favorably for the state and other public aqenci~s
that are members of PERS, then the $6 millicn credit will be
reflected in the Reserves. In the General Fund, this .... ould mean
the Reserve far Capital Projects would increase by $5.1 million
($2.2 million from the credit in 19'31-92, and $:2.9 million from the
credit currently being accu~ulated in 1992-9J.}
other Items
There have been recent developments on several items that ~ere n?t
included in the 199~-94 Budget, but ~hich ~ill be reflected in th~
Midyear Report o~ the 1992-93 budget early next year.
First, as part of the state bUdget package the LegiSlature and
Governor agreed to extend the "funding year" for PERS unfur:ded
pension obljgations even further t~an the City requested earlier
this year. 'I'he City asked FERS to extend the funding year from
2000 to 2016, but the state budget package set the date five years
late~ than that. As a result, the i~ediate General Fund savings
in City contributions to FERS will be approximately $61D, 000
annually, rather than the $560,000 savings identified in the staff
reports that preceded Council's decision to reguest the extension
to 2016.
Second, the expected cost of the Comprehensive Plan update has been
refined to $0.5 million (three-quarters of which is to be paid by
the General Fund), .... hich wac;; recently approved by Council.
Third~ in the enterprise funds, staff will be coming to council in
the near future with a budget amendment request to augment and
renovate the utility billing system.
CKR:499:92 is
. ,
..
~.:;> -
"
All threp. of these budget developments ~ill be re~lected in the
Midyea~ Report next year.
RlcoMend..tioD
Sta.f! recommends that the City Council adopt the attached ordinance
authorizing: 1) closing of the 1991-92 Budget; 2) reappropriating
funds into the 1~92-93 Operating Budgeti 3) and closing various
Cnpital Improvement Project balanc~s, for projects which have been
c~mpleted, to the Reserve for Capital Projects.
~;;:zsitted'
~~~~ D" ector o~nance
E ~~ terim Cit~~.ager
Also appe~ded are:
Attachment 1
Exhibit A
Exhibit B
Exhibit c
Budget Amendment Ordinance
Re.appropriations from Fiscal Year 1991-92
Analysis of Reserve Balances by Fund
Capital Improvemellt Projects Summary
Related Staff ~eports:
CMR:499:92
CMR:154:92
C/ffi:235:92
CMlh425:92
CMR:487:92
CMR:45S:92
CMR:501:92
19
.. ~ ..
/
') ATTACIf£IlT 1
ORDINANCE NC.
ORQnlANCE OF 'l'HE COUNCIL OF THE CITY OF PALO ALTO
AUTHORIZING CLOSING OF THE BUDGET FOR FISCAL YEAR 1991-92
WHEREAS, pursuant to the provisicns of Section 12 of Article
III of the Charter of the Cit:,' of Palo Alto and as set forth in
Section 2.28.070 ¢f the Palo Alto Municipal Code, the Council on
June 24. 1991 did adopt a budget for fiscal year 1991-92; and
WHEREAS, fiscal year 1991-92 has ended and the financial
results, although subject to post-au~it adjustment, are now
available and are here~ith reported in summarized fin~ncial
exhibits prepared by the Director of Finance which are attached.
hereto, and by reference made a part hereof; and
WHEREAS, pursuant to Section 2.28.080 of the Palo Alto
Municipal Code, the City Manager did amend the budgetary accou~ts
of the City of Palo Alto as sho .. .m on the attached exhibits to
reflect:
<Ai Additional appropriations author~zed by ordinance of the
Cit)" Council.
CBl Amendttents to employee compensation plans adopted by the
Ci ty Council.
eel Transrers of appropriations from the contingent account
as authori2ed by the City Han~ger.
(Dl Redistribution of
programs, and objects within
the City Manager.
appropriations betw~en divisions,
various departments as authorized by
(E) Fiscal year 1991-92 appropria~ions which on July I, 1992
were encumbered by properly execut.~d, but. uncompleted, purchase
orders or contracts; and
WHEREAS, Article III, Section 12, of the Charter of the city
of Palo Alto requires city Council approval of additional appropri
ations or transfers of appropriations from one department to
another; and
WHEREAS, fiscal year 1991-92 appropriations in certain
departments and categories as sho ..... n cr: the attached Exhibit IOA-,
whiie not obli9ated by purchase order or contract, at year-end are
nevertheless recommended for reappropriation in the fiscal year
1992-9) budget;
NOW, THEREFORE r the Council of the City of Palo Alto does
ORDAIN as follows:
•
o
SECTION 1. The city Manager is authorized and directed. to
increa.se l if necessary. authorizations in. the utility funds by
amounts sufficient to p::-ovlde for-purchase of additional 'Water,
gas, electric, and refuse collection se,J:'"vices. in the event the
sales of said utilities services exceed the original estimates
con't,ained in the fiscal year 1991-92 budget.
SECTION 2. The fiscal year 1991-92 appropriations for the
departments and categories shown on Exhibit ~A· shall be carried
forward and added to t~e fiscal year 1992-93 budget.
SECTION 1.
directed~
The City Manager is further authorized and
(Al To close the fiscal year 1991-92 budget accounts in all
funds and departrnent$ and to make such interdepartmental transfers
as required by the Charter of the City of Pale Alto t by ordinance,
or as set forth in the fiscal year 1991-92 budget a5 adopted or
amend:ed.
(B) To close various completed capital II't'.provement Projects
and move the balances into the Reserve for capital Projects.
(C) To e~tablish reserves as sat forth on Exhibit "8" in the
a~ounts sho~ or as necessary to provi1e fo~:
{l) A reserve for encumbrances and reappropriations in
the various funds, che purpose of which is to carry for .... ard and
continue in effect the unexpended balance of appropriations for:
caJ Outstanding purchase orders and contracts for
which qoods or services have not been received or completed by the
last day of fiscal year 1991-92. Such appropriations sha 11 be
carried forward and added to the fiscal year 1992-93 budget~
(b) Fiscal year 1991-92 departmental expenditu~~s
which were authoriz~d to be carr~ed forward in Section 2 above~
(2) Reserves for Advances to Other Funds and for Stor('s
Inventory in accordance _'ith ordinance and policy g\lidelines.
(3) Reserves tor utilities plar,t replace!1ent, transfc-r
stabilization, system improvement, and other reserves in accorctan~"c
with Charter and policy quidelines.
(4) A reserve for general contingencies of such a~o~~!
that the City Council may approve.
( 5)
the remainder
revenues over
After providing for the: foregoing reserves, transfez
of the fiscal year 1991-92 excess of General Fund
expend~tures to the Reserve for Capital Projects~
.s..ECTIQ.!:L..!. Upon completion of the independent audit,
detailed financial statements giving effect to all the above
sections shall be published as part of the annual financial report
of the ~ity as required by Article III, Section 16, of the Cha~ter
. -, -.
of the city of Pa!o Alto and in accordance ~ith generally ac~epted
accountinq p~inciples.
SEctION 5. The Cour'lc.il of the Cit)' of Palo Alto hert:"!by finds
that the enactment of this ordinance is not a project under the
California Envlronmental Quality Act and, therefore, nCi environmen
tal impa.:::::t asse~,sment is necessary ..
SECTION 6. As provided in subsection (3) of Section 2.04.J75
of the Palo Alto Municipal Code, this ordinance= shall become
effective upon adoption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTEII'I'IONS :
ASSERT:
ATTEST: APPROVED:
Clty Clerk Mayor
APPROVED AS TO FORM:
Sr. Asst. city Attorney
APPROVED:
city Manager
Director of Finance 92-93,5
..
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DIV'lSlON
GENBRAL FUN!>
Human Resources
Information
Resources
Public WorksJ
Facilities
Management
Plannin9/
Inspect~on
Services
Fire
Commun.i.ty
Servicesl
Recreation,
Open Space Ii:
Sciences
Community
~e~ffes!parkS
Community
Services!
CUbberley
Community
Services/
CUbberley
:-,-, ... ~-,.
EAHIBIT A
1,,1-" REAPPROPRI~rICN ~EQUEsrs
FUnding for the Managers
Forum series. Two presenta
tions were rescheduled to
1992-93.
Temporary contract PrD9rammer
Anal}'st to help mainta~n t,he
current Favroll System "'hile
brinqing new system on line.
Replacement of exterior doors
ana installation of windows
at Foothill Interpretive
Center~
R2placement of carpet in A
level Communications Center~
Design and
counter at
Library~
remodel of the
Mitchell Fark
Continuing review of struc
tural compliance with the
Seismic Identification
Program ordinance.
Moditication of Hatmat data
base to confcrm with state
and local requirements.
Purchase of self-contained
breathing appa.ratus reim
bursed by SB90 funds~
Grant funded Youth comml1nity
Services pro)ect with Constl
tutional Rignt Foundation~
Design and specification of
Golf Course lrrigation
system.
Purchase of house speakers,
lighting and sou~d equipment
for the theatre.
Purchase of ne>.\r{ curtains for
theatre and up-grading of
rigging to mnet current
safety standards.
TOTAL GENERAL PUN!>:
1
5t
.'.
Mom
4,250
32,000
150,000
10,000
25,000
7,DOO
16,000
13,120
21,363
75,000
4,700
10,000
$278,433
o
1"1-'2 REAPPROPRIATION REQUESTS
n;ry;Sl:ON
ENTERPRISE FUNDS
ut.ilities
Administration
EL]!CTR IC FOND
Resource
Management
GAS FUIIll
WGW Operations
GIS project for a permanent
b~semap to replace temporary.
Acquisition of Mobile Data
Terminals for the Gas Meter
Service crew.
Funds t.o cover eY.penses
related to the reallocaticn
of Utilities ~ersonnel on a
temporary baSlS.
Project to develop customer
data hase on too 1~5 utility
corporate customers t,,'hich
comprise 55 percent of sales
revenue.
Final ~ayment for PARTNERS
Electr1c Incentives progra~.
construction will be
completed in 1992-93.
Project to calibrate
specialized large gas meters.
public Education activities
included in the Source
Reduction and Recycling
Element.
TOT~L ENTERPRISE FUNOSl
INTERNAL SERVICE FUlr."D
PW/Equipment
Management
SPECIAL REVENUE
!"'3DS
Planning/CDBG
Purchase of two electric
Cushman scooters for Traffic
Control.
Equ~prnent/material hauling
tra11er.
Tempora,ry CDEG rehabilitation
specialist; funding
appropriated in the 1991-92
CDSC allocation.
TOTAL Clry REAPPROPRIATION REQUESTS
2
AMOUNT
$ 10,000
50,000
40,DOO
11,50C
51,200
29,227
50,000
$ 241,927
24,000
3,500
34,585
. ,'"
~.; ..
19U-U RLVPltOPRrATrON REQUESTS
,DIVISION EXPLAn,TIOH
CAPITAL PROJECT FOND REAPPROPRIATIONS
Project #18008
WQCP-Pr!mary
SediInentation
Project 118828
Midtown ... Tr'lffic
Improvement
pr-oject #18932
Playing Field
Improvement
Project 119009
Finance Vault
Remodel
Project 119012
FIR Persor:.nel
System
Project #.19076
Bike Parking
Facility
Proje.ct #9050
Refuse Gas
Condensate
Project #905.1
Refuse Landfill
Levee
Protection
Project #9105
Wide Area
Network
Project #9251
Bus Tie Breaker
At Colorado
Substation
Repair sedimentation tank
cracks~
c.ounci 1 approved permanent
striping for roadbumps in
Midto~~ neighborhood.
Extension to reimburse Palo
Alto Unified School District
for Field i~provenents if
drought cond~tions exist.
Purchase fireproof cabinets
tor the 4th floor department
move..
Replace the current batch
processing payroll system.
Purchase bic¥cle racks in
downtown Cal1fornia Avenlle
business distrIcts.
Engineering, desiqn ,
construction for Landfill Gas
Condensate systen.
Engineering, design'
construction for Landfill
Levee Protection~
Desig~, purchase,
installation, implenentati~n
of wide area network.
Purchase 69kV brea~er for
main power bus at Colorado
substation.
TOTAL CAPITAL PROJECTS
3
,
34,408
10,979
245,623
33,000
50,000
.10,000
80,000
150,000
150,000
295,000
$l,05!J,OlO
I
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