Attachment 3Subject:
Attachments:
FW: Agenda Items 4, 5 and 6 - October 16, 2018 Town Council meeting
Attachment_ld_-_Financial_Summaries_Section 15.pdf; ATT00001.htm
On Oct 12, 2018, at 7:46 PM, Phil Koen <pkoen@monteropartners.com> wrote:
Dear Town Council Members,
I am writing to you on behalf of a number of concerned residents of the Town.
In reviewing Items 4, 5 and 6 on the October 16 agenda, the Staff is requesting the Town Council to
approve salary increases (equity and salary adjustments) for the Police Officers Association, the AFSCME
and the unrepresented employees (which includes management and confidential employees) and to
authorize FY 2019 budget adjustments totaling $1,044,381. This would be in addition to the salary and
budget adjustments already approved by the Town Council in August for the TEA totaling $440,106 and
for the AFSCME totaling $53,417.
Taken all together, this would bring the total salary adjustments for FY 2019 to $1,537,904. This
represents just the impact for FY 2019, since there are additional increases planned for FY 2020.
If correct, this is a staggering number, the magnitude of which has never been clearly presented to the
residents of the Town.
Using the information provided by the Staff, this $1,537,904 increase represents a 6.2% increase for
salaries alone (the impact on increased pension costs is not included). The 6.2% increase is computed
by dividing the $1,537,904 by the FY 2018 estimated salary and benefits expenditures of $24,700,282
(this is the number reported in the attached schedule).
What is even more alarming is that in the FY 2019 budget document (again refer to the attached
schedule) the residents were told "salary increases are not reflected in the proposed budget as labor
negotiations with the Town's unions are pending". Apparently this is why the Staff is now requesting the
Town Council to increase the FY 2019 budget for salary and benefit expenditures by $1,537,904. This
would bring the FY 2019 budget for salary and benefit expenditures to $28,884,998.
If correct, the year over year increase (actual to budget) in salary and benefit expenditures is now a
mind blowing $4,184,716 or 17%!
Three members of this Town Council (Mayor Rennie and Council Members Leonardis and Jensen) have
submitted a written ballot argument (which they also attested to the accuracy of all statements) stating
that compensation increases in 2019 will only be 1.2%. This claim doesn't appear to square with the
facts.
Since facts matter, transparency matters and honesty matters, it is time for the Town Council to clearly
state what is the "all in" increase in salary and benefit expenditures for FY 2019 that this Council has or
will be approving. Is it the 1.2% that Mayor Rennie has publically claimed, or is it the 6.2% that I have
computed or is it something else? This is a legitimate question that deserves a straight answer.
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In addition, we would like to know what the budget for FY 2019 for total salary and benefit expenditures
will be as a result of all of the proposed budget adjustments. Is it still $27,347,094 as reported on C-15 of
the FY 2019 budget, or is it $28,884,998 after giving effect to the $1,537,904, or is it some other
number? The voters in Los Gatos deserve to know so they can make an informed decision when they
vote for the next Town Council.
We would also appreciate an explanation regarding the increase in the FY 2019 budget (whatever that
number is) for salary and benefit expenditures versus the reported FY 2018 of $24,700,282. Please do
not provide an explanation of the FY 2018 budget to FY 2019 budget increase since you have already
done this and frankly it is not relevant.
Lastly, we respectfully request that agenda items 4, 5 and 6 be removed from the consent calendar
because of the materiality of the requests and the lack of clarity as to the impact on the FY 2019 budget
for salaries and benefit expenditures. This is a sufficiently important matter that the public deserves to
hear the critical thinking of the Town Council and have the ability to comment on this matter.
I plan to attend the October 16 meeting and if the agenda items have not been removed from the
consent calendar prior to the meeting, I will formally request this action.
Thank you for your attention to this matter.
Phil Koen
2
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TOTAL TOWN EXPENDITURES
BY CATEGORY
FY 2018/19 Budgeted Expenditures
Operating
Expenditures
Transfers
Out
Internal
Fixed e
Assets "'ems
L_ -L' C---1% 711
SA
Pass Thru
Salaries
& Benefits
Grants
Interest
Capital Debt
Projects Services
2014/15 2015/16 2016/17 2017/18 2017/18 2018/19 % of
Expenditures Actuals Actuals Actuals Adopted Estimated Proposed Total
Salaries and Benefits $ 21,972,399 $ 22,766,441 $ 25,344,865 $ 27,005,920 $ 24,700,282 $ 27,347,094 40.5%
Operating Expenditures 14,618,759 15,342,699 16,085,203 15,993,014 16,574,844 20,864,268 30.9%
Grants 197,074 194,155 209,381 209,800 201,520 227,000 0.3%
Fixed Assets 355,799 958,991 402,807 877,161 962,469 1,798,038 2.7%
Interest 938,055 897,398 802,166 809,740 809,739 759,073 1.1%
Internal Service Charges 3,330,792 3,546,185 3,558,503 3,988,278 3,915,437 2,490,028 3.7%
Capital Projects 3,639,640 2,293,247 6,863,375 4,015,509 5,344,584 8,598,140 12.7%
Successor Agency Pass Thru 1,196,966 786,362 673,323 670,694 804,040 673,696 1.0%
Debt Services 990,000 1,025,000 1,065,000 1,105,000 1,105,000 1,150,000 1.7%
Total Expenditures $ 47,239,484 $ 47,810,478 $ 55,004,623 $ 54,675,116 $ 54,417,915 $ 63,907,337
Transfers Out 9,353,932 3,070,585 7,907,692 3,627,063 3,725,063 3,630,056 5.4%
Total Uses of Funds $ 56,593,416 $ 50,881,063 $ 62,912,315 $ 58,302,179 $ 58,142,978 $ 67,537,393 100%
Total Budgeted Expenditures (exclusive of Transfers Out) include budgeted Capital Improvements, which can vary significantly
from year to year. Net of Capital Projects and the IRS Trust payment of $3.2 million, total expenditures reflect a 3.0 % increase
for FY 2018/19 compared to the prior year adopted budget. Expenditures of note include:
Salaries and Benefits — The FY 2018/19 budget reflects an increase in salaries and benefits attributed to increased CaIPERS and
medical benefits rates. Salary increases are not reflected in the proposed budget as labor negotiations with the Town's unions
are pending. Staffing modifications include eliminating certain vacant positions and reclassifying them to better align with service
delivery within the existing budget, including the 0.25 FTE Library Specialist position in the Library Program. The 1.0 FTE IT Analyst
position and the 0.125 FTE increase for the Deputy Town Attorney are permanent additions to the budget. Staff also proposes
one-time temporary hours within Police Department and Community Development Department.
Fixed Assets — Budgeted fixed asset costs stem primarily from scheduled vehicle and equipment replacements. The variance in
expenditures from year to year does not impact current year charges to the Departments, only the actual cash out to replace the
asset.
internal Service Charges — These expenditures represent the service program costs charged back to the operational programs
for Liability Insurance, Office Equipment, Information Technology, Vehicle Maintenance, and Building Maintenance services. The
FY 2018/19 budget reflects a decrease in the Internal Service Charges since all personnel that were previously funded in Internal
Service Fund Programs are programmed starting in FY 2018/19 in the General Fund, increasing total General Fund salaries and
benefits expenditures while decreasing the Internal Service Fund charges by the same amount.
Debt Service — Debt service charges reflect the Redevelopment Agency's two outstanding Certificates of Participation (2002 and
2010) through a leasing expenditure and reimbursement revenue which nets to zero for the Town, while Successor Agency (SA)
to the Los Gatos Redevelopment Agency funds provide the actual debt payment for the bond issues. The SA reimburses the
General Fund for the debt service payment. The 1992 COP for Parking Lot #4 was paid in full in early FY 2012/13.
C-15