RPVCCA_CC_SR_2014_06_03_04_Draft_FY14-15_BudgetCrTYOF RANCHO PALOS VERDES
MEMORANDUM
TO: HONORABLE MAYOR & CITY COUNCIL MEMBERS
FROM: DENNIS McLEAN, DIRECTOR OF FINANCE &
INFORMATION TECHNOLOGY \lfj to1 Dff-9'
DATE: JUNE 3, 2014
SUBJECT: DRAFT FY14-15 BUDGET
REVIEWED: CAROLYNN PETRU, ACTING CITY MANAGE~
Project Manager: Kathryn Downs, Deputy Director of Finance & Information
Technology
RECOMMENDATION
Provide additional direction to Staff for any final modifications to the draft FY14-15
Budget.
DISCUSSION
Staff has prepared a draft of the FY14-15 Budget that incorporates City Council direction
provided on March 18, 2014 and April 29, 2014. Each City Council Member received a
separately bound copy of the draft budget document, and the draft budget has been
available at City Hall and on the City's website for review since May 23, 2014.
The draft FY14-15 General Fund budget is summarized below.
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Revenue : $26,316,925 $ 231,306 $26,548,231
Transfers from Other Funds 208,000 208,000 ..
Estimated Excess General Fund Reserve
Expenditures
Transfers to Other Funds
Increase of General Fund Reserve
Threshold {50% of Increase to
1, 786, 755 1, 786, 755
{18,940,233} {1,550,206) {20,490,439}
{7,584,506) {7,584,506)
Expenditures} {405,960) {405,960}
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DRAFT FY14-15 BUDGET
June 3, 2014
Page 2 of 5
The draft budget for FY14-15 results in estimated net activity of $62,081 in the General
Fund, a balanced budget and continued General Fund Reserves in excess of the Reserve
Policy threshold. General Fund Revenue is expected to increase by about 3.81 % from
FY13-14, and draft expenditures are expected to increase by about 4.1 %.
City Council Policy No. 45 -Balanced Operating Budget states: "The City Council shall
adopt an annual operating budget where recurring expenditures do not exceed recurring
revenues, and ongoing program expenditures are not funded with one-time revenue
sources." The summary above indicates that the draft FY14-15 General Fund budget is
balanced as required.
A reconciliation from the City Council direction on April 29, 2014 to the current version of
the draft ~Y14-15 General Fund budget follows.
City Council Direction April 29th
Meetings & Conferences (as originally proposed)
Sheriff Liability Trust Fund (increase from 4% to 5%
contribution on January 1, 2015)
(64,000)
(20,600). (20,600)
Employee Classification/Compensation Study ($95,000
authorized, $3,000 previously included) ... (92,000) (92,000)
Animal Control Contract (more current information)
Abalone Cove Beach Building Improvements
(4,000) ~ (4,000) ...
(50,000) (50,000)
Abalone Cove Shoreline Park Landscape & Fence (corner of
PVDS & Sea Cove Drive)
...
(30,000) (30,000) ...
Increase of Reserve Threshold (50% of expenditure
increases)
~:!-·
A summary of the adjustments to the City Council direction of April 29th follows.
• The City Council requested that a detailed list of meetings and conferences be
provided before making a budget decision. That detailed list was provided to City
Council via email on May 22, 2014. No additional questions have been forwarded
to Staff. Therefore, Staff has included a meeting and conferences budget
allocation as originally proposed.
• The Los Angeles County Sheriff's Department notified Staff that the City's required
contribution to the Sheriff's Liability Trust Fund would increase to 5% of the City's
contract billings on January 1, 2015. The contribution has been 4% for the last two
years. The Sheriff's Department expects that the contribution will increase to 6%
on July 1, 2015, then normalize to 5.5% on July 1, 2016.
• On May 14, 2014, the City Council approved inclusion of $95,000 in the draft FY14-
15 for an employee classification/compensation study. The draft FY14-15 budget
had previously included a $3,000 allocation for an initial small study. Therefore,
the net increase to the draft FY14-15 budget is $92,000.
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DRAFT FY14-15 BUDGET
June 3, 2014
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• The County provided additional information to the City about its upcoming animal
care rate changes; which Staff used to adjust the budget estimate for the City's
Animal Control program, resulting in an estimated net cost increase of $4,000.
• Staff proposes two additional small projects at Abalone Cove to be included in the
Parks, Trails & Open Space Maintenance program in the General Fund. The
projects fall below the $100,000 threshold for inclusion in the Five-Year Capital
Improvement Plan document.
• As a result of the additional expenditures included in the draft FY14-15 budget, the
City Council's General Fund Reserve policy threshold level increased by $91,300
(50% of annual budgeted expenditures).
The following items have not yet been included in the draft FY14-15 budget.
• On April 29, 2014, the City Council directed Staff to provide cost information for an
additional staff person in the City Manager's Office to manage inquiries from both
the City Council and the public. After analyzing the duties and minimum
qualifications of similar positions in other cities, the Acting City Manager suggests
that such a position could be included in the budget at the Administrative Analyst I
pay level. However, due to the specific nature of the job duties, staff recommends
that the position be a new classification, Council Liaison, and that it be a
confidential, at-will, exempt position. The Council Liaison would report to the City
Manager and could assist the City Council members in a variety of community
outreach functions, including: receiving and resolving constituent complaints,
concerns and requests for information; researching and analyzing policy issues;
and coordinating special events, projects, and programs. The total annual salary
and benefit cost of a full-time position would be $82,700.
• As a participating jurisdiction in the Los Angeles Regional Interoperable
Communications System Authority (LA-RICS), the Los Angeles County Sheriff's
Department may pass on a share of the operation cost to the City beginning as
early as FY14-15. The item is scheduled to be considered by the City Council on
June 17th, which is the same agenda that City Council is currently scheduled to
adopt the FY14-15 budget.
• Cost-of-living or merit increases to employee salaries, or benefit improvements
have not been included in the draft FY14-15 budget. After the City Council
completes the negotiation process with the Rancho Palos Verdes Employee
Association, Staff will calculate any adjustments to employee compensation and
return to City Council for decision-making, if applicable.
• The City recently received a $1.9 million settlement from Southern California
Edison for the August 2009 Portuguese Bend Fire. This amount will be reduced
by legal and other administrative expenses incurred by both the City and the Palos
Verdes Peninsula Land Conservancy. Staff expects that in the near future, the
City Council will make a decision regarding the use of the net proceeds.
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DRAFT FY14-15 BUDGET
June 3, 2014
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Capital Improvement Projects (GIP)
The following is a summary of capital spending included in the draft FY14-15 budget.
ADA Transition. Plan Proje~~~ 400, 000
RPV TV Building lmprowments 110,000
Hesse Park/Ryan Park Fiber Optic Cabling 260,000
Landslide Early Warning System 300,000
New ~andslide Dewatering Wells 180,000
Eastview Dog Park . 50,000
Gateway Park Dewlopment 200, 000
Hesse Park Parking Lot 210,000
Lower Hesse Park lmprowments 1,000,000
PVIC Screening Wall 110,000
Sunnyside Se~ment Trail 465,000
Arterial Street Rehabilitation 2,500,000
Residential Street Rehabilitation 3,000,000
Drainage Area Monitoring System ··· 300,000
Storm Water Quality Regional Project 100,000
Engineering and Grant Administration 150,000
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Report 500,000
Drainage lmprowments 440,000
Sacred Cow/P\iC>s Drainage lmprowment · · 450,000
Storm Drain Lining Program ·· · ·· · 335,278
Storm Drai~ Line Point RepairProjects 150,000
. Drainage Master Plan Program · 30,000
Storm Drain & Filtration Maintenance & Repair 237,518
!Administration (contract/staff engineer) 162,200
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Note: The Five-Year
of $100, 000 or more.
4,465,817
General Fund Transfers (in excess of transient occupancy tax) 3,231,306
Restricted Funds 3,942,873
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Two projects have been included in the draft FY14-15 budget that were discussed, but
not approved by City Council on April 29, 2014, for funding from the GIP Reserve. The
first project is a placeholder for the Lower Hesse Park Improvement Plan in the total
amount of $1,000,000. As directed by the City Council on July 17, 2012, Staff has been
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DRAFT FY14-15 BUDGET
June 3, 2014
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working with the Pacific View Homeowners to develop a scaled-down, phased version of
the "Pacific Plan" previously approved in 2010. The revised plan, including the proposed
phases and allocation of costs among th~ phases, is expected to be presented to Council
in early fall 2014 The final project cost allocation can be determined at that time, if the
City Council decides to move forward with the project.
In addition, the Public Works Director recommends a budget allocation of $300,000 for a
Landslide Early Warning System. The main sewer trunk line that parallels Palos Verdes
Drive South aboveground in the landslide area, and the roadway itself, require constant
maintenance due to land movement. Closure of the facilities would be highly disruptive
to economic vitality, and health and safety. The proposed system is a series of sensors
placed throughout the landslide area that transmit data via wireless or satellite service.
An early yJarning system would provide critical advanced knowledge of changed land
conditions to enable faster proactive response. This project would be funded by the CIP
Reserve. The ongoing operations and maintenance of the system is estimated to be
$30,000 per year.
If the City Council approves all project budget allocations as proposed, the estimated
balance of the CIP Reserve at June 30, 2015 will be $7,696,980. Even though a project
may receive a budget allocation, all projects requiring a contract over $25,000 must be
separately approved by City Council before proceeding. The draft 2014 Capital
Improvement Plan document has been included as a separate item on the June 3, 2014
agenda.
Budget Process Next Step
The next step in the 2014 Budget Process is to make any last adjustments to the draft
FY14-15 budget before it is considered for adoption by the City Council on June 17, 2014.
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