Loading...
Staff Report Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director TOWN OF LOS GATOS STUDY SESSION REPORT MEETING DATE: 1/31/17 ITEM NO: 3 DATE: JANUARY 24, 2016 TO: MAYOR AND TOWN COUNCIL FROM: LAUREL PREVETTI, TOWN MANAGER SUBJECT: PRIORITY SETTING STUDY SESSION RECOMMENDATION: Identify Strategic Priorities for 2017 – 2019 and provide direction on the preparation of the Draft Fiscal Year 2017/18 Operating and Capital Budgets, including the use of approximately $2.1 million of savings from FY 2015/16. DISCUSSION: On January 31, 2017, the Town Council will have an opportunity to consider a variety of ideas that have come forward from Town Commissions, the community, and Town Departments. Dr. Shawn Spano will facilitate the Study Session. This report transmits background information for the Town Council’s consideration and preparation for the Session. Five Year Financial Forecast After restoring the Budget Stabilization Reserve to FY 2014/15 levels, the Town completed FY 2015/16 with a savings of approximately $2.9 million. The savings were due to vacancy savings and lower expenditures than budgeted. To date, the Council has committed $434,414 of this amount as follows, with approximately $2.5 million remaining for priority setting.  $300,000 for CalPERS Reserve  $100,000 for North Forty Litigation  $ 34,414 for Pageant Way Parking Lot Improvements As discussed later in this report, Town Departments have identified approximately $380,000 of required expenses for FY 2017/18 to maintain service levels and meet new requirements, resulting in approximately $2.1 million available for priority setting. In addition, the Town Council Finance Committee earlier this week inquired about the availability of funds from the Town’s Budget Stabilization Reserve for priority setting. This Reserve has $2 million over the required amount of 12.5% of projected General Fund revenue. The Council, by resolution, may approve the use of some or all of the “excess” for priority PAGE 2 OF 5 SUBJECT: PRIORITY SETTING STUDY SESSION DATE: JANUARY 24, 2017 S:\COUNCIL REPORTS\2017\01-31-17 Priority Setting\1-31 Study Session.doc 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov setting. This discussion should occur during the Review and Discussion of Background Materials portion of the Study Session. If Council decides to add this amount, the reso lution will come to Council at a subsequent regular meeting. The Finance Department has completed a forecast of the next five years based on available data, trends, and expert advice (see Attachment 1). The Forecast document explains the methodology and assumptions. For the FY 2016/17, the forecast estimates a $0.2 million surplus after accounting for changes in revenue assumptions and approved salary increases. The Departments are currently reviewing expenditures to date against the adopted FY 2016/17 budget, and at the Mid-Year Budget Review in late February, the Council will learn how the current year is progressing. For FY 2017/18, the forecast projects a surplus of $0.4 million. For FY 2018/19 to FY 2020/21, shortfalls range from $0.3 to $1 million. By FY 2021/22, a surplus of $0.2 million is projected. Even though the near term estimates with any forecast are easier to determine compared with longer term projections, it important to run the numbers to be aware of and plan accordin gly for potential future trends. The Town has not yet received the actual costs of the CalPERS Board’s decision to reduce its investment target from 7.5% to 7%. The impact of this change is expected to be distributed over the next eight years, starting in FY 2018/19. The forecast does anticipate increased pension costs as a subset of benefits. The costs of Other Post-Employment Benefits are also in the forecast as an annual $1.6 million expenditure. Based on past Town performance, the Town’s budget should be able to absorb 3 to 5% increases in expenditures over the forecast period. Town Department Work Plans Attachment 2 contains the work plans of all Town Departments and Divisions. As a service organization, each Department devotes approximately 80% of its staff time and other budget resources providing core services to the community of Los Gatos. The remaining 20% of Department resources are allocated to special projects, such as Strategic Priorities. The work plans have been updated to include work that can no longer be absorbed without some staff resources (such as additional temporary hours in the Police Department to handle increased case load), new Occupational Safety and Health Administration (OSHA) requirements, and the annual costs associated the Town’s Clean Energy Option (to be decided at a Town Council meeting in February). These items are proposed to be included in the FY 2017/18 PAGE 3 OF 5 SUBJECT: PRIORITY SETTING STUDY SESSION DATE: JANUARY 24, 2017 S:\COUNCIL REPORTS\2017\01-31-17 Priority Setting\1-31 Study Session.doc 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov Operating Budget with a total estimated cost of approximately $380,000. This amount should be deducted from the available $2.5 million, leaving $2.1 million for Priority Setting. Core Goals and Status of Current Strategic Priorities Attachment 3 contains the Core Goals for the Town of Los Gatos, which are Community Character, Good Governance, Fiscal Stability, Quality Public Infrastructure, Civic Enrichment, and Public Safety. These goals guide the work of the Town as a local government in meeting the needs of the community. As part of the Study Session Agenda, the Council will be asked to affirm these goals and elaborate on their definitions to set a foundation for priority setting. Attachment 3 also contains a list of completed priorities and the current status of FY 2014 – 2016 and FY 2015 – 2017 Strategic Priorities. At this time, staff is assuming that the Town Council would like to complete all existing Strategic Priorities. At the Study Session, the Council will have the opportunity to provide direction on these existing Strategic Priorities. Input from Commissions on Potential Priorities Attachment 4 includes input from several Town Commissions regarding items that they would like to work on with Town staff support. Some of the ideas, such as the Age Friendly Community designation, could be considered by the Town Council as a potential new Strategic Priority for 2017 – 2019. Other ideas, such as park and transportation improvements, could be considered as priorities for the next Capital Budget. The Council may also choose to accelerate a Commission idea ahead of an existing Strategic Priority. List of Potential Ordinances In coordination with all Town Departments, the Town Attorney has provided a list of potential ordinance amendments to the Town Code in Attachment 5. This list is in priority order based on State laws and service delivery issues, such as resolving difficult code compliance cases. Input from Staff on Potential Service Enhancements and Capital Projects Attachment 6 contains the ideas from all Town Departments regarding potential service enhancements (Operating Budget) and potential capital projects, including maintenance and equipment needs. Cost estimates are provided. Each Department ranked the ideas in priority order. PAGE 4 OF 5 SUBJECT: PRIORITY SETTING STUDY SESSION DATE: JANUARY 24, 2017 S:\COUNCIL REPORTS\2017\01-31-17 Priority Setting\1-31 Study Session.doc 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov Ideas from the Community Over the last year or so, several additional ideas have been suggested by community members for consideration as new Strategic Priorities (see Attachment 7). These ideas have been organized into the categories of potential ordinances and policies, service enhancements, and capital projects. Estimated costs of some of these ideas are pr ovided for items that could be estimated without additional Council direction. Attachment 8 contains public comment. New idea(s) from the public comments that have not already been identified in other attachments have been added to Attachment 7. As add itional public comments come forward, other new ideas will be added and the Council will receive an updated Attachment 7 for its use prior to the Study Session. Priority Setting Process After review and discussion of the background materials and public testimony, the Council will go through the following steps to set priorities: 1. Identify any additional items for priority setting. 2. Determine the allocation of the $2.1 million (or up to $4.1 million) between Operating Budget service enhancements, Capital projects, and unfunded pension and OPEB liabilities. 3. Decide if the current Strategic Priorities should be completed. 4. Prioritize the list of potential ordinances and policies. 5. Prioritize potential Operating Budget enhancements. 6. Prioritize potential Capital Budget projects. CONCLUSION: The Town of Los Gatos provides a high level of service to residents and businesses by providing key local government services of public works, parks, library, police, and community development with the necessary support services of information technology, finance, and human resources. The Town Manager’s Office leads and guides these administrative duties and closely collaborates with the Town Attorney’s Office to support the work of the Town Council. From the Council’s priority setting, the work of the Town Departments and Commissions can be aligned to these priorities. The Council’s direction will also guide the preparation of the FY 2017/18 Operating and Capital Budgets for Council consideration in May. PAGE 5 OF 5 SUBJECT: PRIORITY SETTING STUDY SESSION DATE: JANUARY 24, 2017 S:\COUNCIL REPORTS\2017\01-31-17 Priority Setting\1-31 Study Session.doc 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov COORDINATION: The preparation for the Study Session was done in coordination with all Town Departments. FISCAL IMPACT: The Study Session outcomes are intended to provide direction for the preparation of the Draft Fiscal Year 2017/18 Operating and Capital Budgets, including the use of approximately $2.1 million of savings from FY 2015/16. CEQA: The Council’s work associated with the Study Session is not a project under the California Environmental Quality Act and no environmental review is required. Attachments: 1. Five Year Financial Forecast 2. Town Department Work Plans 3. Core Goals and Status of Current Strategic Priorities 4. Input from Commissions on Potential Priorities 5. List of Potential Ordinances 6. Input from Staff on Potential Operating (Service) Enhancements and Capital Projects 7. Ideas from the Community 8. Public Comment