Attachment 2Los Gatos Town Council Meeting
5-16-17
Comment on the 2017-2018 Budget and the new Financial Committee:
I applaud the Town Council for expanding the Town Council Finance Committee to include 3
non -voting citizen members. I've attended their first 2 meeting and they are clearly engaged,
asking good questions, and offering an expanded perspective. I realize that we are in the early
stages and that the budget issue has been pressing a shorthanded staff. Hopefully, there will
be a pick up in the pace as I feel the FC should meet at least monthly until matters are further
along than they are now.
I support the Town's Strategic Priority for 2017-2019 to "Address Unfunded Pension and OPEB
Liabilities"
AGENDA ITEM 4: AUDITOR SELECTION PROCESS
Selecting the new auditor would seem to have been an opportune time to utilize the members
of the Financial Committee, and perhaps, an assignment for them to handle. It appears that
only the staff was utilized to make the selection. Is it a common practice for those being
audited to select who audits them?
AGENDA ITEM 7: The Operating and Capital Budgets:
Based on the 5 Year Financial Plan on page A-9, I would like to monetize the problem created
by increasing employee costs. These increases are driven primarily by benefits. We need to
put a long term plan in place to address the issues caused primarily by these increasing costs.
As it stands currently, our current plan is not sustainable without sacrificing other critical
government services or people.
Per the 5 Year Financial Plan, Employee Benefit Expenses are forecast to increase from 22.1%
of total expenditures in the current fiscal year to 28.2% of total expenditures in FY 2022/23. As
a result of the 6.1 percentage point increase, other expenditures will have to be reduced. The
dollar amount of the increase is $4.1M or 9.6% of total expenditures.
One consequence of the increase in the cost of benefits, the Town will have $4.1M Tess to
spend on strategic initiatives, key personnel and opportunities to enhance service delivery
through technology investments.
Another way to say this is that forecasted available expenditures 5 years from now, other than
for benefit costs, are only $1.1 M or 4% higher than in the current proposed 2017/18 budget.
Furthermore, between now in then there will be another labor contract negotiation that is not
reflected in the FY 2022/23 forecasted expenditures.
These future increased costs are in addition to a 7.1% ($1.7M) increase in total labor costs
between the estimated FY 2016/17 final expenditures and the proposed FY 2017/18 budget.
ATTACHMENT 2
The largest single dollar amount of the General Fund Reserves is Other at $4.876M
(per page A-5). The explanation on page A-6 does not seem consistent with the dollar
amount. Could you please provide more detail of the "Other" classification?
Pg. A-5:
General Fund Reserve
6/30/2013
Actual
6/30/2014
Actual
6/30/2015
Actual
6/30/2016
Actual
6/30/2017
Estimated
6/30/2018
Proposed
Commited to:
Budget Stabilization Reserve
Catastrophic Reserves
CaIPERS/OPEB Reserve
Almond Grove Reserve
Assigned to:
Open Space Reserve
Sustainability
Strategy Reserve
Capital / Special Projects
Special Studies
Post Retirement Medical
Vasona Land Sale
Other
$ 5,450,000
$ 5,450,000
$ 5,450,000
$ 6,621,808
$ 4,637,406
$ 4,969,847
5,450,000
5,450,000
5,450,000
4,637,406
4,637,406
4,969,847
-
-
-
300,000
1284 402
2 284 402
-
-
-
8,459,973
2,896,200
562,000
562,000
562,000
562,000
562,000
562,000
140,553
140,553
140,553
2,600,000
2,600,000
600,000
12,427,161
10,218,579
9,511,527
4,222,405
2,822,405
3,125,901
490,000
490,000
490,000
-
-
-
400,000
-
400,000
-
-
410,599
411,245-
787,294
297,294
339,837
99,284
4,847,721
4,876,845
Total General Fund Reserve
$ 25,977,054
$ 22,879,118
$ 22,203,364
$ 27,643,429
$ 24,428,093
$ 21,529,395
Pg. A-6:
"Other
The Town has several other smaller reserves that have been classified as other. These reserves include
an open space reserve which may be used to make selective open space acquisitions and a sustainability
reserve which will be used to fund projects that enhance the community environment"
Jak VanNada
Los Gatos Community Alliance,