May 14th–18th, 2012. Mayors Opening Comments Overview of Budget Process Budget Picture City Wide Budget General Fund Overview Water & Waste Water Funds.

City of Modesto Fiscal Year 2012 – 13Budget WorkshopsMay 14th–18th, 2012

AgendaMayor’s Opening CommentsOverview of Budget ProcessBudget PictureCity Wide BudgetGeneral Fund OverviewWater & Waste Water FundsService ImpactsDepartment PresentationsMayor’s Closing Comments & RecommendationsFinance Committee Deliberations and Policy Considerations

Mayor’s Opening Comments

“Do not follow where the path may lead. Go instead where there is no path and leave a trail.”

- Ralph Waldo Emerson

Overview of Budget Process

FY 2012-13

• Began Budget Process in October• Reviewed Prior Year Reductions• Developed List of Reductions & Revenue

Enhancements• Developed List of Unmet Needs / Critical Services• Fund Balance Carryover:$4.7million• Vacant Positions

Budget Picture

Revenues trending up slightlyRecovery slow, yet hopefulCommunity support & City staff commitmentEconomic Impacts on Central Valley Continue - housing market, foreclosures, unemployment rate, construction industry, etc.)

Budget PictureContinued

Continued challengesExpenditures still exceed revenuesService levels remain flat but needs are evidentWater & Wastewater rates stable - Future rate increases being proposedSalary & Benefits (contractual raises, increased PERS costs, retiree health care costs projected to increase annually)MPOA – 2% August, 2012 – Estimated at $310,052MPMA – 2% August, 2012 – Estimated at $82,571MCFFA – 3% July, 2012 – Estimated at $460,898

Structural Change neededOne time fixes are being depleted

City – Wide Budget

1% 2%34%

32%

13%

0%

18%

FY 2012-13 Operating Expense by Fund Type$351 Million

CIPDebt ServiceEnterpriseGeneral FundISFRDASpecial Rev

General Fund Overview – FY12/13Amount

Total Revenues $ 101,752,591

Total Expenditures: Department Budgets (101,544,318) Transfers Out (8,202,314)

(109,746,632)

Shortfall $ (7,994,041)

Notes: Revenues include Transfers InTransfers Out include: Debt Service - $3,400,801Surface Transportation MOE - $1,687,7154th Year of PD ARRA Grant - $986,000

Mayor's Recommended Reductions or Enhancements Are Not Included

Shortfall for 2012 / 13

AmountUse of FY11/12 Fund Balance $ 4,718,202 Mayor's Recommended Reduction List:

Revenue Enhancements 337,868 Expenditure Reductions 243,170

Total to Date $ 5,299,240

Remaining Reductions to be Made $ 2,694,801

Source of FY 11-12 Fund Balance Carryover

Amount Fund Balance Carryover - FY 10/11 $ 1,493,348Departmental Savings:

Police 859,668Parks, Recreation & Neighborhood 418,655Others 269,441

Unanticipated RevenuesPolice 595,393Business License 359,447Sales Tax 187,485Others 534,765

Total to Date $ 4,718,202

FY 12 / 13 Proposed General Fund Revenues

Inc (Dec)Amount % From FY11/12

Sales Taxes $ 26,081,348 26% $ 1,000,000 Utilities User Tax 18,900,000 19% - Other Revenues 14,840,238 15% (375,800) VLF Swap 12,088,914 12% (120,000) Property Taxes 11,441,213 11% (106,212) Business License 9,341,032 9% 144,987 Franchise Fees 3,754,890 4% (48,000) Transfers In 2,349,971 2% (267,344)

Construction Revenue 1,717,853 2% 89,456 TOT 1,500,000 1% (100,000) Vehicle License Fees 75,000 0% (600,000)

$ 102,090,459 100% $ (382,913)

FY 12/13 ProposedGeneral Fund Revenues

26%

19%15%

12%

11%

9%4% 2%2% 1%0%

Sales TaxesUtilities User TaxOther RevenuesVLF SwapProperty TaxesBusiness LicenseFranchise FeesTransfers InConstruction RevenueTOTVehicle License Fees

Total Revenues

75,000,000.00

85,000,000.00

95,000,000.00

105,000,000.00

115,000,000.00

125,000,000.00

2007 2008 2009 2010 2011Actual

2012Budgeted

2013Proposed

$120,369,703

$126,547,754

$118,157,318

$104,337,195

$109,083,458

$102,473,372 $102,090,459

FY12/13 Proposed General Fund Expenditures

Department %

Police $ 48,755,502 45%Fire 23,358,566 21%PR&N 11,163,141 10%C&ED 5,848,656 5%Finance 4,911,584 4%City Attorney 2,394,476 2%City Manager 1,509,989 1%Human Resources 1,373,133 1%City Council 475,713 0%City Clerk 383,198 0%Office of the Auditor 163,756 0%Transfers Out 8,136,314 7%Non-Departmental 1,029,434 1%

$ 109,503,462 100%

Includes Mayor's Recommendations

FY12/13 Proposed General Fund Expenditures

45%

21%

10%5%

5%2%

1%

2%1%

8%1%

Police Fire PR&N C&ED

Finance City Attorney City Manager Human Resources

City Council City Clerk Office of the Auditor Transfers Out

Proforma

2010/11 2011/12 2011/12 2012/13Current Adopted Current PreliminaryActual Budget Budget Budget

REVENUES:

Revenue 102,851,001$ 99,395,143$ 99,856,057$ 99,614,620$ Revenue-Mayor's Recommended -$ 139,868$

Transfers In 6,232,457$ 2,611,654$ 2,617,315$ 2,137,971$ Transfers In-Mayor's Recommended -$ 198,000$

TOTAL REVENUES 109,083,458$ 102,006,797$ 102,473,372$ 102,090,459$

EXPENSES: (Inc Roll Over Enc)

Department Expenses:Non-Departmental (888,036)$ (841,503)$ (861,503)$ (1,029,434)$ City Council (320,967)$ (371,673)$ (342,637)$ (485,073)$ City Manager (1,409,237)$ (1,491,462)$ (1,571,977)$ (1,509,989)$ Human Resources (1,098,355)$ (1,029,232)$ (1,058,427)$ (1,394,741)$ City Attorney (1,844,160)$ (2,051,285)$ (2,051,760)$ (2,394,476)$ City Clerk (453,400)$ (796,066)$ (796,094)$ (383,198)$ Office of the Auditor (178,277)$ (167,487)$ (167,493)$ (163,756)$ Finance (4,295,424)$ (4,821,398)$ (4,918,329)$ (4,961,003)$ Community & Economic Development (5,232,580)$ (5,298,822)$ (5,349,112)$ (5,928,680)$ Fire (24,461,412)$ (25,093,361)$ (23,358,566)$ (23,358,566)$ Police (45,955,696)$ (47,223,961)$ (47,487,135)$ (49,092,297)$ Parks, Recreation & Neighborhoods (10,274,865)$ (10,464,407)$ (11,291,635)$ (10,843,105)$ Public Works (279,258)$ -$ (25,406)$ -$

Sub-Total Department Expense (96,691,667)$ (99,650,657)$ (99,280,074)$ (101,544,318)$ Expense-Mayor's Recommended -$ 965,568$ 177,170$

Transfers Out (7,947,130)$ (6,608,610)$ (7,630,358)$ (8,202,314)$ Transfer Out-Mayor's Recommended -$ 66,000$

TOTAL EXPENSES (104,638,797)$ (106,259,267)$ (105,944,864)$ (109,503,462)$

Reserve for Encumbrances - Current Year (458,262)$ -$ -$ -$ Reserve for Encumbrances - Prior Year 279,736$ -$ 458,262$ -$ Change in Advances to Other Funds 50,000$ -$ -$ -$ Prior Period Adjustment 49,092$ -$ -$ -$ CAFR Adjustment 361,984$ -$ -$ -$

NET CHANGE IN FUND BALANCE:

Fund Balance, July 1 10,004,221$ 11,253,059$ 14,731,432$ 11,718,202$

Fund Balance, June 30 (Unreserved) 14,731,432$ 14.1% 7,000,589$ 6.6% 11,718,202$ 11.1% 4,305,199$ 3.9%

Reserve Level 7,000,000$ 7,000,000$ 7,000,000$ 7,000,000$ Projected Cash Reserve Over/(Under) Reserve 7,731,432$ 589$ 4,718,202$ (2,694,801)$

City of Modesto - General Fund Proforma at 04/24/12

Water and Wastewater Funds

Water Fund Budget $58 Million3.1% Rate Increase

Wastewater Fund Budget$41 Million7% Rate Increase

Fiscal Challenges

Service Impacts

Tree TrimmingFire ServicesPolice ServicesStreet SweepingAll Support DepartmentsStreet LightingPark MaintenanceRoadsGraffiti Abatement

Employee Benefit Fund

EBF – New actuarial analysis conducted in 2011Annual Required Contribution (ARC) doubled from previous actuarial studyThe City is not fully covering pay-go costsPay-go costs are expected to double by 2020

City ContributionRetiree Medical

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

FY06-07

FY07-08

FY08-09

FY09-10

FY10-11

FY11-12

FY12-13

$1,889,684

$2,120,556

$2,356,924

$2,720,564$2,769,177

$3,261,710

$3,625,896

Worker’s Comp Fund

Workers Comp – New actuarial analysis done in 2011Claims cost have trended lower, but the actuarial has amortized the deficit funding to cover previous year holidaysThe City is not fully covering Worker’s Comp cost (It is projected that reserves will drop from 14 mill (10/11) to 9 mill. (12/13)

WORKERS’ COMPENSATION FUND Projected funding and expenses at current level*

10/11 Actual 11/12 Es-timated

12/13 Proposed

13/14 pro-jected

14/15 pro-jected

15/16 pro-jected

16/17 pro-jected

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000 Revenues

Expenditures

Fund reserves

*Funded to 75% of recommended actuarial funding

History of Funded Positions

FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/131000

1050

1100

1150

1200

1250

1300

1350

1400

1364.5

1187.5 1189.31137.7 1147.2

Sustainability Moving Forward

RE-BALANCE5th Year of fixesStaffing levels reflect 2003Still need on-going, permanent change

(i.e., roll-overs, one-time monies)Adapt to changing economic climateTo sustain moving forward, requires balance

Monday, MAY 14th, 2012

City ClerkCity AttorneyCity Manager, City Council & City AuditorParks, Recreation & NeighborhoodsFinanceHuman ResourcesCommunity & Economic DevelopmentPolice

Department Presentations

Utility Funds ReviewSewer (Wastewater)Storm DrainWater

Utility Planning & ProjectsSurface Transportation Funds (STF)-CEDD, Public Works & PRN

Department PresentationsContinued

Tuesday, MAY 15th, 2012

Department PresentationsContinued

Public WorksFleetTransitAirport & Parking

Information & Technology FundModesto Regional Fire Authority (MRFA)

Tuesday, MAY 15th, 2012

Department PresentationsContinued

Report Backs/Discussions ContinuedPolicy Issues AddressedSummaryFriday Meeting (To be held if needed)

Thursday, MAY 17th, 2012

Mayor’s Closing Comments & Recommendations

See Mayor’s Recommendations Tab Located in Budget Binder (hard copies are available)

Finance Committee Deliberations and Policy Considerations

Closing

Thank you & Questions