06 Staff Report - FY 2007/08 Budget Savings~pW N 0
Uli
~os'GApS COUNCIL AGENDA REPORT
DATE: DECEMBER 12, 2008
MEETING DATE: 12/15/2008
ITEM NO: 6
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
SUBJECT: DESIGNATION OF FY 2007108 BUDGET SAVINGS AND ASSOCIATED
FY 2008109 BUDGET TRANSFERS
A. APPROVE DESIGNATION OF FY 2007108 GENERAL FUND REVENUE
AND EXPENDITURE BUDGET SAVINGS IN ACCORDANCE WITH
COUNCIL RESERVE POLICIES
B, AUTHORIZE BUDGETED TRANSFERS IN FY 2008109 FROM
GENERAL FUND DESIGNATED RESERVES AS PROVIDED FOR IN
THE TOWN FY 2008109 OPERATING AND CAPITAL BUDGET
RECOMMENDATION:
1. Approve designation of FY 2007/08 General Fund revenue and expenditure budget
savings in accordance with established Council reserve policies.
2. Authorize budgeted transfers in FY 2008109 from General Fund designated reserves as
provided for in the Town's FY 2008109 Operating and Capital Budget.
BACKGROUND:
Preliminary financial results for the Town General Fund reflect year-end undesignated available
balances of approximately $2.5 million for FY 2007108. Last May 2008, staff estimated that the
balance available for designation would be approximately $1.7 million. The undesignated
balance exceeded staff estimates due to budget savings and conservative revenue projections at
the time the budget was prepared. These additional funds will assist the Town in addressing its
current fiscal situation for the FY 2008109 budget year.
Past Council practice concerning the use of yearend undesignated general fund balances is to
ensure that legally required reserve balances are maintained. All remaining undesignated funds
are allocated equally to the Revenue Stabilization Reserve and the General Funds Reserve for
Future Capital and Special Projects.
PREPARED BY: STEPHEN CONWAY
Finance & Administrative Services Direct r
CAIDocuments and Scltingslpjacobs.LOSGATOSCA1Desktop112-15 General Fund Designation Council Report,doe
Reviewed by: Assistant Town Manager -0/ Town Attorney
Clerk Administrator Finance Community Development
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: DESIGNATION OF FY 2007108 BUDGET SAVINGS AND ASSOCIATED
FY 2008109 BUDGET TRANSFERS
DECEMBER 12, 2008
DISCUSSION:
During the FY 2008109 budget development process, several one-time capital project priorities
were recommended and approved for funding out of the estimated year-end fund balance,
including the Plaza Fountain filtration system., the public safety microwave project, and tree
trimming and root pruning.
As of June 30, 2008, staff has confirmed that there is approximately $2,535,820 in year-end
undesignated general fiend balances. Staff recommends additional reserve designations be made
before depositing the remaining balance in equal amounts to the Revenue Stabilization Reserve
and the General Fund Reserve for Future and Special Projects as per past Council practice.
The table below identifies the recommended designations for these funding priorities:
General Fund Undesignated Balances
$2,535,820
Previously-Approved Designations
Fountain Filtration System Upgrade Project
($204,500)
Police eCom Microwave Project
($132,000)
Tree Trimming and Root Pruning
($100s000)
New Recommended Designations
Police Operations Building
($375,000)
Retiree Medical Actuarial Liability
($400,000)
Fountain Filtration System Upgrade Project
($100,000)
Future Capital and Special Projects
($612,160)
Revenue Stabilization Fund
($612,160)
Unallocated Balance
$_0_
RECOMMENDED FUNDING DESIGNATIONS
The following section outlines the proposed uses and benefits of the recommended funding
designations.
Police Operations Building. The proposed $375,000 designation would provide a funding
augmentation to ensure adequate balances are available to fund the recently redesigned police
operations building, including the Emergency Operations Center as a cost effective "add
alternate."
Retiree Medical Actuarial Liability. The proposed $400,000 designation would provide a source
of funds to augment future annual revenue streams dedicated for the phased funding of the
retiree medical obligations required by the Governmental Accounting Standards Board (GASB)
Statement 45. The first phase of funding for this liability has been appropriated from FY
2008109 budgeted operating revenues in the amount of $400,000.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: DESIGNATION OF FY 2007108 BUDGET SAVINGS AND ASSOCIATED
FY 2008109 BUDGET TRANSFERS
DECEMBER 12, 2008
Fountain Filtration Upgrade Project. The proposed $304,500 designation would fund the FY
2008/09 Capital Improvement Program (CIP) ultraviolet light advance filtration system. The
approved FY 2008109. CIP only included $204,500 of fund balance designations, but an
additional $100,000 is now necessary because of potential Town reallocation of Monte Serena
park bond funding.
Police eCom Microwave Project. The proposed $132,000 designation would fund the FY
2008109 CIP project for the design, purchase, and installation of interoperable communications
equipment at the new police operations building to connect law enforcement, fire protection and
emergency medical services agencies throughout Santa Clara County.
Parks and Public Works Tree Trimming, Curb & Gutter. The proposed $100,000 would fund
$50,000 for additional root pruning work associated with the FY 2008109 CIP curb, gutter, and
sidewalk project to decrease incidences of trips and falls. An additional $50,000 is proposed to
fund contract tree trimming services -in the FY 2008109 Parks and Public Works street program
operating budget.
Revenue Stabilization Reserve and Reserve for Future and Special Projects. Per Council policy;
the remaining undesignated fund balances are divided equally between these two resetves to
provide a funding source for future infrastructure improvements and mitigate impacts to service
delivery during periods of short term economic downturns or significant land use changes in the
Town.
Upon Council approval of recommended designations, the general fund reserves and
undesignated balances as of July 1, 2008 would be approximately $17.1 million. This amount
includes the Town's two contingency reserves - Reserve for Economic Uncertainty ($3.7M) and
Revenue Stabilization Reserve ($4.4M), which total approximately $8.1 million. These two
contingency reserves combined represent approximately 25% of the FY 2008109 general fund
operating budget. The Town has met and exceeded the Government Finance Officers
Association's recommended reserve of 5 to 15 percent.
ENVIRONMENTAL ASSESSMENT:
This report is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
Sufficient undesignated balances are available per the preliminary financial close of General
Fund revenues and expenditures for the fiscal year ending June 30, 2008.