HomeMy WebLinkAbout13 - PH-3B - CEO Recommended Adopted Budget - 6/21/2011CITY COUNCIL AGENDA REPORT
MEETING DATE: JUNE 21, 2011 ITEM NUMBER:
SUBJECT: CEO RECOMMENDED ADOPTED BUDGET
DATE: JUNE 17, 2011
FROM: OFFICE OF THE CEO
PRESENTATION BY: THOMAS R. HATCH, CHIEF EXECUTIVE OFFICER
FOR FURTHER INFORMATION CONTACT: THOMAS R. HATCH, (714) 754-5328
RECOMMENDATION:
Adopt attached Resolution No. 11-xx approving the Fiscal Year 2011-2012 Operating
Capital Improvement Budget.
BACKGROUND:
Throughout the last several months the City Council has held many informative budget
sessions. It is our understanding that these sessions have been helpful to many of our
different stakeholders. The sessions have included more detail and produced a clearer
working knowledge of important aspects of the City's liabilities, assets and long-term
financial health. We better understand our financial challenges and we can use this
knowledge to better develop strategies to proactively tackle our problems with specific
solutions. The sessions also served to further open lines of communication by providing
many opportunities for the community to ask questions and receive answers. Given the
serious issues, it is healthy for all of us to hold ourselves and each other.even`,more
accountable for our financial future.
This staff report is to serve as the culminating document to help wrap-up the budget
development process for this year. Although, the budget development process will be
concluding, the approach staff is planning to take is to continually keep the budget in
our every day thoughts. Staff will work day -in and day -out to continually improve our
financial situation while ensuring that we continue to provide the best service possible to
the community. We will use every opportunity to foster creativity and innovation in
service delivery and strive for greater efficiency, but it should be noted by all that this
budget includes reductions in service levels and this reduced service level will impact
the community. Staff will do all it can to reduce the impact of these service level
reductions.
Attached to this report are the first budget memo dated May 31, 2011 (Attachment 1)
and the last budget staff report dated June 10, 2011 (Attachment 2). These two
attachments outline the key budget information that is under consideration by the City
Council along with the entire FY 2011-2012 Preliminary Budget. Many other documents
and materials have been provided throughout the process and they are available on-line
on the City's website.
Staff is also introducing a new tool this year - the Five -Year Projections and Capital
Reinvestment Strategy. This will be introduced on June 21, 2011 but a full discussion of
how the City will effectively use the tool and how to create/adjust the assumptions that
will guide us will be reviewed at the July 12, 2011 City Council Study Session. A copy
of the draft Five -Year Projections will be handed out and presented at the June 21,
2011 City Council meeting.
In addition, at the July 12, 2011 City Council Study Session, the budget/financial
discussions will continue. We will review several important financial related issues
including:
• Begin the discussion about adjusting the Five -Year Projections and Capital
Reinvestment Strategy to best fit our long-term needs;
• Begin the discussion about the proposed financial and budget policies. These
policies will annually help guide staff with the development of the annual budget;
and
• Introduce the City's General Fund Cash Flow Model and discuss how this tool
can help us.
Every other month at a Study Session, staff will provide an update on key
budget/financial issues to ensure that they continue to be our top priority.
ANALYSIS:
At the Budget Study Session of June 14, 2011, staff outlined the final recommended
changes to the budget and presented a balanced budget. This achievement was the
result of solid work from many staff from all departments and incorporated many of the
expectations that had been expressed by the City Council and community. Staff would
like to thank the City Council, Commissions, fellow staff and community members for
their many suggestions and leadership with this difficult process.
The following City Council comments and requests from the last Study Session will be
reviewed further or incorporated in the budget as well:
• Create a Performance Auditor position — Staff suggests that this issue be
reviewed in detail and an approach be developed for review by the City Council
at the City Council Study Session in August.
Increase contract budget for Helicopter Support Services from $150,000 to
$300,000 — In addition to this General Fund funding of $150,000, the budget
includes a full year of the ABLE Commander position. It is unlikely that it will take
the entire fiscal year to dissolve the Program and when the Commander position
gets folded back into the Police Department staff, significant savings will occur.
This savings could be used to increase the number of contract helicopter service
hours. In addition, staff suggests that at the end of the first quarter of the next
fiscal year, a report be developed and presented to the City Council to review the
progress of the change from the ABLE program to the contract with the City of
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Huntington Beach. At that time, any recommended budget or operational
changes could be made to plan for the long-term success of the new partnership.
• Move the K-9 Unit into the regular patrol operations for the Police Department —
While this was recommended in the Management Partners report, the CEO will
direct the new Police Chief to review the personnel deployment of the
Department, and specifically the K-9 Unit, to determine the level of calls for
service and how best to deploy the Unit.
Increase the coverage for schools for School Resource Officers (SRO) — The
City will continue with sworn officers as SRO's in the two high schools. Staff will
work with the Interim Police Chief and Police Officers Association to request
through the meet and confer process that the two SRO positions change their
work schedules from 4 days/10 hours per day to 5 days/8 hours per day to allow
for five day a -week coverage at both high schools. In addition, staff will have the
Police Department review how personnel can be deployed to further support the
high schools and middle schools in the community. One alternative is to recruit
an experienced reserve officer(s) to serve as a part-time SRO and increase
coverage at our schools. Staff will work through the details on this issue.
A question was asked about the number of arrests that are made on campus
each year — This information is listed below:
Through
School Resource Officers Activitv Total 2009 Total 2010 May 30, 2011
Law Enforcement Presentations
68
90
63
School Related Criminal Investigations
358
367
286
Meetings
263
290
242
Students Counseled
1139
1186
719
Arrests
43
38
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• Explore and implement a system to provide a time clock system — This request is
being researched and a report will be brought back to the City Council for review
in the next two months.
• Explore and implement a system to track City vehicles through a GPS system -
This request is being researched and a report will be brought back to the City
Council for review in the next two months.
• A request was made for a list of City vehicles — It is clear that more discussion
needs to occur concerning the Equipment Replacement Fund. It is suggested
that this discussion be postponed from this hearing tonight until either the July or
August Study Session of the City Council. Staff will provide the list shortly.
• More detail on Economic Development Consultant — In the short time period from
the June 14th Study Session and the writing of this report, staff was unable to
complete a report on this item. It is recommended that either the City Council
approve the budget with the $100,000 cost for this consultant as a place holder
with the understanding that staff will bring back a report on this issue or that the
City Council remove this item from the budget until a report is developed.
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• Sales tax forecast data relative to prior history — Staff is developing this analysis
and it will be presented to City Council shortly.
• A question was asked about what other cities have budget contingency accounts
and what percentage of their budget do they use — Staff is developing this
analysis and it will be presented to City Council shortly.
It is recommended that the City Council adopt the recommended budget as presented
on June 14, 2011.
ALTERNATIVES:
At the Budget Study Session of June 14, 2011, Mayor Pro Tem Righeimer suggested
several changes to the budget. The following are the suggested changes and a
recommended action:
• Reduce the revenue estimate for Sales Tax by $400,000 - Staff reviewed the
projections carefully and believes that the initial recommendation is still
conservative and appropriate given the indicators and information available. The
approach staff is using on all revenue projections is to try to be conservative but
not ultra -conservative. Although, it is acknowledged that projections are simply
our best educated estimates and that sales tax revenue can vary significantly
from year to year.
• Add $1.5 million back into the budget for charges to Departments for the
Equipment Replacement Fund - Staff had recommended the reduction of $1.9
million from the charges as part of the budget solution. In addition, staff is
looking to significantly reduce the City's fleet to both reduce on maintenance time
and costs as well as future replacement costs. The sales proceeds from
unneeded vehicles will be placed back into the Fund to support future costs of
the Fund. More analysis is needed, but staff still believes that this Fund can be
restructured to fundamentally reduce costs for the General Fund in the future. In
future years and as part of the Five Year Projections, staff is planning to annually
budget charges for equipment replacement at $1,000,000 for the General Fund.
• Increase the budget contingency amount from $50,000 to 1% of the budget or
approximately $970,000 - Staff agrees that the City should have a budget
contingency. A 1 % rate seems reasonable, but some time may be needed to
build up to that expected contingency level.
If the City Council chooses to amend the proposed budget to include the three changes
above (value of $2,820,000), then staff recommends the following:
Reduce the final proposed budget for legal services from $1,003,000 to $803,000
or a reduction of $200,000;
2. Reduce the budget for a Business License Tax consultant from $40,000 to
$20,000;
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3. Reduce the budget for a Economic Development Consultant from $100,000 to
$50,000;
4. Authorize the budgeting of anticipated salary savings. With 29 positions currently
vacant and an annual total compensation value of those positions of $4,264,000,
the CEO will actively manage the vacancies to ensure that salary savings is
generated in the amount of over $1,050,000; and
5. Authorize the budgeting of anticipated savings from either of the following or a
combination of the following: eliminating vacant positions, restructuring the
organization as new vacancies occur or any savings generated from outsourcing
one or more City service areas. A report will be presented to the City Council at
mid -year that demonstrates savings to the budget of $1,500,000.
The savings from the five recommendations above total $2,820,000 and would allow the
City Council to implement the changes suggested by Mayor Pro Tem Righeimer.
FISCAL ANALYSIS:
As proposed by the City CEO, the City's fiscal year 2011-2012 Budget is approximately
$114.9 million. As shown in the table below, the proposed General Fund budget is
balanced at approximately $95.1 million and also provides $63,727 surplus to replenish
the General Fund Reserve (Fund Balance).
The following table illustrates the total estimated revenue, total appropriations, and total
fund balances used for all funds.
Description
Estimated Revenue
Transfers In
Use of Fund Balances
Total Resources
General
Fund
$95,127,204
All Other
Funds
$16,786,020
100,000
Total
$111,913,224
100,000
(63,727) 2,947,568 2,883,841
$95,063,477 $19,833,588 $114,897,065
Proposed Operating Budget 94,963,477 9,384,466 104,347,943
Proposed Capital Budget - 10,449,122 10,449,122
Transfers Out 100,000 - 100,000
Total Appropriations
$95,063,477 $19,833,588 $114,897,065
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CONCLUSION:
It is recommended that the City Council adopt the FY 2011-2012 Budget.
Thomas R. Hatch
Chief Executive Officer
Attachments 1 Budget Memo Dated May 31, 2011
2 City Council Study Session Report — June 10, 2011
3 Resolution Adopting a Budget for FY 2011-2012
ATTACHMENT 1
CITY OF COSTA MESA
CEO'S OFFICE
MEMORANDUM
TO: CITY COUNCIL, CITY STAFF & COMMUNITY MEMBERS
FROM: THOMAS R. HATCH, CHIEF EXECUTIVE OFFICER
DATE: MAY 31, 2011
SUBJECT: CEO RECOMMENDED CHANGES TO THE FY 11-12 PRELIMINARY BUDGET
The preliminary budget for FY 2011-2012 includes the entire budget allocations including the
changes already made during the departmental budget hearings with the CEO. These changes that
occurred at staff level budget hearings included expenditure and revenue changes reducing the
overall budget shortfall from approximately $5 million down to approximately $3.3 million ($1.7 million
in changes). Again, all of these changes are already included in the budget detail presented in the
preliminary budget. The details of the $1.7 million in changes are attached to this report as
Attachment A.
Reductions of $3.3 million are needed to develop a recommended balanced budget for FY 2011-
2012. Below is a listing of key budget changes that represent additional changes of approximately
$2.4 million is savings that further help balance the budget. With the changes presented below, the
CEO's recommended budget still is approximately $900,000 short of a balanced budget. In the next
few weeks the CEO will make additional recommendations that will reduce the $900,000 gap down to
a balanced budget. These final recommendations will be even more difficult and will involve
reductions to staffing levels and departmental reorganization.
Below are additional budget recommendations totaling $2.4 million in savings:
Reduce amount charged to the General Fund for Internal Rent — Replacement Charges. - $1.9
million.
To be prepared for future replacement of current vehicles and equipment, the City established an
Internal Service Fund called the Equipment Replacement Fund (ERF). This fund was established
even earlier than 1990. By doing so, it allowed the City over the years to allocate money separate
from the General Fund for vehicle and equipment purchases. The City currently has a total of 314
vehicles and equipment it tracks in the ERF.
Money is moved to the ERF by way of annual "Internal Rent" charges to funds that use the vehicles
and equipment, most notably the General Fund. This fund has two components: Internal Rent —
Maintenance Charges for fleet maintenance staff, fuel, tires, etc. and Internal Rent — Replacement
Costs for the replacement of vehicles and equipment. This money is held as fund balance and each
year staff assesses the need to replace any vehicle or equipment and makes recommendations to
the City CEO during the budget process. Keeping in mind the needs of the City, the CEO determines
the vehicles to replace as part of the annual budget.
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In light of the budget crisis for FY 2010-2011, the City did not charge any amount to the General
Fund for the Maintenance Charges or Replacement Costs. Because no charges were included, the
fund balance was originally projected to decrease from $7.3 million to $5.2 million. For FY 2011-
1012, staff has included the full costs for Maintenance Charges of approximately $1.8 million. For FY
2011-2012, there are no vehicles proposed to be replaced. Therefore, the City will have not have a
need to utilize money already set aside. However, included in the Preliminary FY 2011-2012 Budget
is $2.1 million in Internal Rent — Replacement Charges. It is estimated that at the end of FY 2010-
2011, the fund balance for the ERF will be approximately $5.4 million. The overall replacement value
of the City's entire fleet (calculated based on original purchase price plus a standard inflationary
factor) is approximately $15.0 million.
Further analysis of the replacement value amount shows that approximately $7.5 million of the $15.0
million is accounted for in the City's top 25 vehicles. These vehicles include 11 Fire
Engines/Apparatus, 3 Street Sweepers, 2 Regenerative Air Sweepers, Vactor Cleaner, PD Mobile
Command vehicle, equipment for paving, equipment for striping, asphalt patch vehicle, water vehicle,
Tractor/Loader Backhoe, and 2 miscellaneous large vehicles.
Of these 25 vehicles, most (20) have a standardized useful life of 15 years for depreciation purposes,
except the 5 Sweepers which have an 8 -year useful life. Of the 15 -year useful life vehicles, 10 were
put into service prior to FY 2000-2001 (5 are Fire Engines/Apparatus), therefore 10 vehicles have
been put into service more recently. Of the 5 Sweepers with an 8 -year useful life, the City put all into
service prior to FY 2004-2005.
Based on staff's review of available fund balance and review of the expected needs to replace
vehicles, the CEO recommends reducing the Internal Rent — Replacement Charges for FY 2011-
2012 by $1.9 million. Reducing to this amount and fully charging for the Internal Rent - Maintenance
Charges will still ensure no use of ERF fund balance in FY 2011-2012.
It is clear that this fund must have continued revenue in the form of Internal Rent moving forward.
The CEO will need to recommend a budget amount of at least $1,000,000 each year (starting FY
2012-2013) for the replacement of vehicles in addition to the amount budgeted for the maintenance
of vehicles. In addition, the CEO has directed the Public Services Director to conduct a thorough
review of the total number of City vehicles with the goal of reducing the number of vehicles by
approximately ten (10%) percent. Over the last few years, the number of employees has been
reduced and there are opportunities to reduce the number of vehicles as well. Reducing the number
of vehicles will reduce the amount of funding needed for the replacement of vehicles as well as
reduce the staff time and expense related to maintaining these vehicles.
Reduce amount allocated for a General Plan Update - $200,000.
Per the request of the City Council, staff included an allocation of $500,000 in the preliminary budget
for a City General Plan update. Based on communication with Development Services staff, a
General Plan update may still be completed with a $300,000 allocation. Therefore, the CEO
recommends reducing the Development Services budget by $200,000. If approved, a Request For
Proposal (RFP) will be developed and distributed. It is likely that this process will take many months
and this competitive bidding process will ultimately determine the costs for this update. Even when a
consultant has been selected and agreements executed, the work for this type of planning process
will taken many months to complete allowing additional funding to be included in the FY 2012-2013
budget if needed.
-2-
Reduce Information Technology budget for Computer Aided Dispatch (CAD) server - $283,000.
As requested by the Information Technology Division, the preliminary budget includes an allocation of
$307,880 for the replacement of the City's CAD server (computer) using General Fund dollars. The
current equipment and technical support have reached a point that the server needs to be replaced
this year. Based on staff's review of CAD incidents, it appears 92% of all incidents are Police related.
Therefore, the CEO recommends utilizing Narcotic Asset Forfeiture money to fund 92% of the CAD
equipment. Planning for the replacement of the CAD server will continue but no purchase will be
completed until a decision is made concerning the RFP process for the emergency dispatch service
area.
Reduce Recreation budget for reduction in Aquatics programming - $39,305 & reduce revenue
of approximately $10,000.
As part of the FY 2010-2011 budget deliberations, closing the City pool during the months of October
through March was proposed to reduce costs. During the winter months, the pool's activity
decreases significantly while the City still incurs costs associated with heating the pool and staffing to
ensure safety. Therefore, the CEO recommends closing the City's pool at the Downtown Recreation
Center for the months of October through March for a net cost savings of $29,305. The key impact
of this action will be the reduction of 420 lap swim hours and 90 swim lesson hours. This will require
changing a full-time Recreation Specialist position to part-time and the reduction of other part-time
staff hours.
Total CEO Recommended Changes = $2.4 million.
Thomas R. Hatch
City Chief Executive Officer
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City of Costa Mesa
Budget Changes from Initial Requests to Preliminary Budget -General Fund Only
Individual Total
Department/Division/Account Amount Amount
City CEO's Office
Remove requested position, Legislative & Public Affairs Manager, which
was left vacant in 2010-2011 and originally proposed for 2011-2012 (182,423)
City Clerk's Office
Increase part-time hours for additional workload assistance
13,837
City Attorney's Office
Increase legal consulting budget per expected workload in 2011-2012
50,000
Increase legal fees per expected workload in 2011-2012
50,000
100,000
Finance Department
Increase for Finance Director position that was vacated and unfunded
193,834
in 2011-2012 budget
Estimated increase cost for the city's annual independent financial audit
after City sends out new Request for Proposal to accounting firms.
10,000
Increase cost incurred by shifting work involving annual independent
financial audit preparation from staff to auditors
10,000
213,834 .
Administrative Services Department
Human Resources Division
Estimated increase cost for consultant services for human resource
functions
100,000
Recreation Division
Decrease in rent at Balearic facility as school district waives cost for 2011-
2012 fiscal year
(71,000)
Telecommunications Division
Increase part-time hours to eliminate much of the department's projected
overtime
182,219
Decrease overtime hours
(203,914)
Eliminate laptop computer request
(5,800)
(27,495) "
IT Division
Increase in cost quote from vendor for computer-aided dispatch server
48,752
Police Department
Decrease salary and benefit accounts for ABLE reduction - 3 helicopter
pilots (432,620)
Shift five police officer positions from general fund to Prop 172 Fund,
which has increased due to rising sales tax revenues. (739,761)
Eliminate two vacant positions that were left vacate in the 2010-11 fiscal
year. (262,025)
(1,434,406)
Page 1 of 3
Individual Total
Department/Division/Account Amount Amount
Fire Department
Decrease in originally proposed overtime (170,436)
Decrease professional development costs to prior year actuals (33,987)
Decrease uniforms and clothing costs to prior year actuals (45,802)
Decrease safety and health costs to prior year actuals (25,575)
Decrease automotive equipment costs to prior year actuals (39,998)
Increase consulting costs for additional fire plan -checking assistance 75,000
Development Services Department
Decrease part-time intern hours (13,796)
Eliminate the previously vacated Sr Plumbing/Mechanical Inspector (
position 96,578)
Eliminate the previously vacated Plan Checker position (100,184)
Decrease Engineering and Architectural costs per staff review (37,000)
Reduce the number of requested field laptops by 4. (10,000)
Public Services Department
Engineering Division
Decrease Legal Advertising/Filing Fees due to change in County cost
Maintenance Services Division
Increased part-time hours related to ballfield preparation
50,366
Increase accounts residential street paving program allowing for 5
additional streets (from 10 to 15 streets)
130,000
Increase in sidewalk grinding to make streets safer and City less
vulnerable to trip -and -fall lawsuits
40,000
Decrease in waste disposal costs after staff review
(14,000)
Increased Landscaping and Sprinklers account for tree trimming costs
returning to every 3-5 years (instead of 5-7 years)
40,000
Eliminate request for new radios
(14,400)
Decrease original $770,000 sought for building maintenance to most
essential repairs
(602,300)
Increase maintenance of sports fields and parks
109,000
Various Departments & Programs
Increase internal charges for equipment maintenance and replacement
due to initial error.
Non -Departmental
Increase general fund transfer to Supplemental Law Enforcement Fund
due to negative balance.
Subtotal Changes in Expenditures
Revenue Changes
Revenue projections changed due to several factors, including updated
numbers, new estimates and historical trends.
Property Taxes 50,000
Sales Taxes (266,290)
Transient Occupancy Tax 9,029
Electric Franchise (50,000)
Cable TV Franchise 50,000
PEG Cable TV Franchise 14,750
Page 2 of 3
(240,798)
(257,558)
(35,662)
(261,334)
716,580
100,000
(1,217,673)
Individual Total
Department/Division/Account Amount Amount
Gas Franchise
(50,000)
Dog License
35,000
Fire Permits
25,000
Building Permits
304,000
Electric Permits
9,000
Plumbing/Mechanical Permits
(6,000).
Street Permits
25,000
Home Occupation Permits
(500)
Special Business Permits
100
Operator's Permits
2,500
Shopping Cart Retrieval
(10,000)
Investment Earnings
50,000.
Investment Market Value Adjustment
(50,000)
Interest Earned - CMRA Note
(1,806)
Building/Ground Rental
50,000
Rental - Downtown Community Center
3,500
Rental - Balearic Community Center
(5,000)
Rental -Tennis Center
1,000
Rental - Golf Course Operations
(100,000)
Rental - Bus Shelter Ads
15,000
Motor Vehicle In -Lieu Tax
100,000
OCTA - SAAV
15,000
Other County Grants
2,500
Reimbursement from ABLE
(194,000)
Zoning/Variance/CUP Fees
25,000
Subdivision Map Fees
1,000
Environmental Impact Fees
(750)
Plan Checking Fees
90,000
Special Policing Fees
(20,000)
DUI/Emergency Response
(50,000)
Jail Booking Fees
(60,000)
Police False Alarms
(25,000)
Fire Inspection Fees
(6,000)
EMS - First Responder Fee
(100,000)
Paramedic Fee - Advanced
50,000
Fire False Alarms
10,000
Park Permits
5,000
Park Improvements
5,000
Youth Sports - Basketball and Football
26,300
Recreation - Aquatics
20,000
Recreation - Playgrounds
114,494
Recreation - Early Childhood
10,000
Instructional Classes
(20,000)
Recreation - Basketball
(16,300)
Teen Camp
(3,400)
Photocopies
500
Special Assessments
10,000
Sponsorship Naming Rights
3,000
Other Reimbursements
100,000
Other Revenue
250,000
Subtotal Changes in Revenues
Page 3 of 3
446,627
(1,664,300)
ATTACHMENT 2
CITY COUNCIL STUDY SESSION
AGENDA REPORT
MEETING DATE: JUNE 17, 2011 ITEM NUMBER:
SUBJECT: CEO RECOMMENDED CHANGES TO THE FY 11-12 PRELIMINARY
BUDGET
DATE: JUNE 10, 2011
FROM: OFFICE OF CEO
PRESENTATION BY: THOMAS R. HATCH, CEO
FOR FURTHER INFORMATION CONTACT: THOMAS R. HATCH @ (714) 754-5328
The preliminary budget for FY 2011-2012 includes the entire budget allocations
including the changes already made during the departmental budget hearings with the
CEO. These changes that occurred at staff level budget hearings included expenditure
and revenue changes reducing the overall budget shortfall from approximately $5
million down to approximately $3.3 million ($1.7 million in changes). Again, all of these
changes are already included in the budget detail presented in the preliminary budget.
On May 31, 2011, a memo was provided to the City Council, City staff and members of
the community outlining key budget changes that represent additional changes of
approximately $2.4 million is savings that further help balance the budget. The prior
memo included the details and justifications for these recommended changes but a
summary list is as follows:
• Reduce amount charged to the General Fund for Internal Rent — Replacement
Charges - $1.9 million;
• Reduce amount allocated for a General Plan Update - $200,000;
• Reduce Information Technology budget for Computer Aided Dispatch (CAD)
server - $283,000; and
• Reduce Recreation budget for reduction in Aquatics programming - $39,305 &
reduce revenue of approximately $10,000.
The total of these recommended above is $2.4 million. With the changes presented
above, the CEO's recommended budget is still approximately $900,000 short of a
balanced budget.
Additional CEO Recommended Budget Changes
Eliminate the Telecommunication Manager position. As part of the reorganization
plan for the Police Department and after internal discussions with several department
heads, it was determined that it would be best and most efficient for our organization to
relocate the management of the telecommunications (911 Dispatch) operations to the
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Police Department. To best integrate this change, it was determined that a sworn
Police Lieutenant position would be best suited to manage the operations. This change
will result in the retention of a Lieutenant position and the elimination of the
Telecommunications Manager position. The estimated annual savings from this change
is $174,356. This savings was included in the police reorganization plan.
Reduce Full-time Recreation Specialist position (Aquatics) to Part-time. As part of
the FY 10-11 budget deliberations, closing the City pool during the months of October
through March was proposed to reduce costs. By closing the City pool for a period
time, it is recommended that the current full time Recreation Specialist position be
reduced to a part time Recreation Specialist position, generating a net savings of
$29,305. This item was included in the CEO's Budget Memo dated May 31, 2011 and
listed above.
As part of the process for the development of the FY 2010-2011 Budget, departments
made recommend cuts at 5%, 10% and 15% levels. A few recommended reductions were
considered by the City Council last year but were not implemented late in the budget
discussions. Three of these recommendations are being presented again for City Council
consideration. They include:
Eliminate an Animal Control Officer position. The City presently has three (3)
Animal Control Officers (ACO) and is proposing to eliminate one of those positions.
Last year the City Council authorized an increase in the dog licensing fees to generate
additional funding to retain a third ACO position. While there is a nexus or connection
between dog licensing fees and the level of service for animal control, currently only
22% of the costs for the animal control operations are covered by the dog license fees.
The remaining 78% of the operations are funded by the General Fund. The General
Fund is currently facing shortfalls and therefore, one of the three ACO positions is again
recommended for elimination. The remaining two positions will be changed from a four
day a week -ten hour per day schedule back to a traditional five day a week -eight hour
per day schedule (pending the meet and confer process) to enhance service coverage.
This will allow coverage with two ACO's for three of the seven days and still one ACO
for the other four days of a seven day work week. The estimated annual savings from
this reduction is $98,007. Also, the City currently has 3 Animal Control vehicles. Staff
recommends eliminating one of these vehicles, and thereby reducing the maintenance
required and the overall size of the City's fleet.
Eliminate the Emergency Medical Services Coordinator position. The civilian
Emergency Medical Services Coordinator position is responsible for administration,
training and quality control for the City Emergency Medical Services through the Fire
Department. The position is solely dedicated to the provision of emergency medical
care services. Last year the Fire Department recommended the elimination of this
position as part of the departmental reductions. The position was retained after the
creation of a new fee for Medicare/Insurance reimbursement and this has helped
General Fund revenues. The Interim Fire Chief will review the workload and determine
the best method to distribute the work to other Department personnel and ensure the
essential services continue to be completed. The estimated annual savings from this
change is $140,218.
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The total savings from the elimination of these two additional full-time positions is
$238,225.
In addition, there is a need to add expenditure items to the preliminary budget. These
included the following additional funding issues:
Increase City Attorney Department budget for legal expenses. In February, staff
estimated the FY 11-12 City Attorney budget for both legal and consulting
expenses to be $603,000. During budget hearing meetings in March and April,
and with recent increased monthly workload and billing, staff included an
additional $100,000 for a Preliminary Budget of $703,000. Given recent monthly
billing averaging over $100,000 per month, staff is recommending an additional
$300,000 to the City Attorney final proposed budget.
Increase Finance Department budget for payroll audit. The City Council has
requested that a payroll audit be conducted. Requests for Proposals (RFP) were
sent out and three proposals have been received. A report will be specifically
coming to the City Council for review and decision on whether to conduct this
audit in July. In anticipation of this work, staff is recommending an additional
$37,000 to the Finance Department final proposed budget.
Increase Finance Department budget for business license tax study and
recommendations. The City Council has expressed a desire to review the City's
current business license tax and review possible changes. Staff recommends an
expert be hired to study and review the City's Business License Tax process and
fee structure and provide recommendations to include efficiencies that can be
created in processing and identifying unlicensed businesses, and propose a new
structure for the City Council to consider and determine if a revised Business
License Tax structure should be placed on the November 2012 ballot. The final
approval of the hiring of the consultant will be considered by the City Council in
the first quarter of the new fiscal year. In anticipation of this work, staff is
recommending an additional $40,000 to the Finance Department final proposed
budget.
Increase City Chief Executive Officer's (CEO) budget for economic development.
The City Council has expressed interest in hiring an economic development
consultant to assist the City in proactively developing the business environment
and creating local jobs. Staff will prepare an -RFP in the first quarter of the new
fiscal year to begin the process of finding a qualified consultant. Staff
recommends an additional $100,000 to the CEO's final proposed budget.
Total cost increase for the above activities is $477,000
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FY 2011-2012 GENERAL FUND PROPOSED BUDGET SUMMARY
Preliminary Estimated Revenues $ 94,578,394
Preliminary Budgeted Expenditures ( 97,871,613)
Preliminary Budget Deficit ( 3,293,219)
Initial CEO Recommended Reductions — May 31 2,415,841
Budget Gap as of May 31, 2011 ( 877,378)
Final CEO Recommended Reductions:
Savings from Police Department Reorganization 1,357,725
Savings from PD Reorg.-
Correction: One Lieutenant position omitted from cost (127,845)
Savings from eliminated positions above 238,225
Additional cost recommended above ( 477,000)
General Fund Contingency in FY 2011-2012 Budget (50,000)
Replenishment of General Fund Reserves ( 63,727)
Total Proposed General Fund Budget Deficit --$--0
As shown, including the CEO's final recommended reductions, the City Council will be
presented with a proposed balanced budget.
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Attachment 3
RESOLUTION NO. 11-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF COSTA MESA, CALIFORNIA, ADOPTING A
BUDGET FOR THE FISCAL YEAR 2011-2012.
THE CITY COUNCIL OF THE CITY OF COSTA MESA DOES HEREBY
RESOLVE AS FOLLOWS:
WHEREAS, the Proposed Budget for Fiscal Year 2011-2012 year has been
prepared in compliance with Section 2-153 of the Costa Mesa Municipal Code.
NOW, THEREFORE, BE IT RESOLVED as follows:
SECTION 1: The annual budget for the City of Costa Mesa for the Fiscal Year
beginning July 1, 2011 and ending June 30, 2012 is hereby adopted as set forth in the
Proposed 2011-2012 Budget.
PASSED AND ADOPTED this 21St day of June, 2011.
ATTEST:
Gary Monahan, Mayor
APPROVED AS TO FORM:
Julie Folcik, City Clerk Thomas Duarte, City Attorney
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss
CITY OF COSTA MESA )
I, JULIE FOLCIK, City Clerk of the City of Costa Mesa, DO HEREBY CERTIFY
that the above and foregoing is the original of Resolution No. 11- and was duly
passed and adopted by the City Council of the City of Costa Mesa at a regular meeting
held on the 21St day of June, 2010, by the following roll call vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
IN WITNESS WHEREOF, I have hereby set my hand and affixed the seal of the
City of Costa Mesa this -th day of June, 2011.
(SEAL)
JULIE FOLCIK, CITY CLERK
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