TITLE
Recommendation to approve the Fiscal Year 2011 fourth quarter departmental and fund budget appropriation adjustments in accordance with existing City Council policy. (Citywide)
DISCUSSION
governing the City’s Adopted Budget for Fiscal Year 2011 (FY 11). Periodically, changes in revenue or operating conditions require appropriation adjustments. For example, in certain cases these adjustments enable departments to expend recently awarded grant revenue for which there is no existing appropriation. In addition, changes for multi-year grants/projects are necessary to bring appropriations in line with final grant/project award amounts. In accordance with the City’s practice, these adjustments are presented quarterly to the City Council for consideration. Please see Attachment A for a Fund Balance Analysis of impacted City funds and Attachment B for a recap of FY 11 General Fund Expenditure Budget Adjustments. This matter was reviewed by Assistant City Attorney Heather A. Mahood on September 8, 2011.
TIMING CONSIDERATIONS
The following requests for adjustments to FY 11 departmental and fund appropriations are necessary to reflect changes in operating conditions. City Council action is requested on September 20, 2011 to enable the timely processing of payments.
FISCAL IMPACT
Health and Human Services
Animal Care Services is requesting an increase in appropriations to cover contract veterinarian cost for the City’s spay and neuter vouchers program. This program provides financial assistance to residents and pet owners to prevent unwanted litters of animals by spaying and neutering their pets. The program is paid for through donations and penalties collected for this purpose. Expenditures for this program will be offset by the Animal Care Trust.
• Increase appropriations in the General Fund (GP) in the Health and Human Services Department (HE) by $15,000.
Library ServicesThe Long Beach Public Library has received $290,067 from Jet Blue as payment in-lieu of City fines for noise violations; and $4,269 from the John Crews Estate. The funds are designated for purchase of Library materials; 60 percent of these funds will be used to obtain materials for branch libraries and 40 percent will be used to obtain materials for the Main Library. An appropriation increase is requested in order to expend the funds in FY 11. This increase in expense appropriation is offset by a corresponding increase in revenue.
• Increase appropriations in the General Grants Fund (SR 120) in the Library Services Department (LS) by $294,336.
Long Beach Gas and Oil
The Tidelands Oil Revenue Fund (TORF) is used to account for all oil operations occurring within the Tidelands area of the City. Revenues and expenditures fluctuate significantly due to changes in the price of oil, with pass-through payments to the State (as required by the various operating agreements) comprising the vast majority of the expenses in the Fund. The remaining expenses support oil operations.
On June 7, 2011, the City Council approved an increase to the Long Beach Gas and Oil Department appropriations for its oil operations based on an estimated annual average oil price of $85 per barrel. Oil prices have since increased and maintained a higher price for most of the summer, and are projected to end FY 11 at an average of $97 per barrel. Based on the higher price, another appropriation increase is required for the higher operational costs, including payments to the State as well as transfers from the Uplands Oil Fund to the General Fund.
• Increase appropriations in the Tidelands Oil Revenue Fund (NX 420) in the Long Beach Gas and Oil Department (GO) by $136,065,338.
• Increase appropriations in the Uplands Oil Fund (SR 134) in the Long Beach Gas and Oil Department (GO) by $9,868,634.
Parks, Recreation and Marine
As part of the Underground Storage Tank Program, the Department of Public Works is in the process of upgrading and replacing equipment at the Alamitos Bay Marina fuel site to ensure compliance with all applicable regulations. Phase I of the project was completed in May 2011. Phase II of the project, including removing and replacing piping and dispensers, is currently underway and an appropriation increase is requested in the Marina Fund. The increase in expenses is offset by reserved funds.
• Increase appropriations in the Marina Fund (TF 403) in the Parks, Recreation and Marine Department (PR) by $75,200.
The Douglas Park Community Facilities District (CFD) is responsible for the irrigation and maintenance of the property and street medians along Lakewood Boulevard from Spring Street to Carson Street. Based on an agreement between the City and Boeing, the unbudgeted expense for reclaimed irrigation water may be reimbursed from assessment funds designated for the maintenance of the CFD infrastructure improvements. The appropriations increase represents unbudgeted expense reported for FY 11, and will be offset by the reimbursement from the CFD.
• Increase appropriations in the General Fund (GP) in the Parks, Recreation and Marine Department (PR) by $66,067.
Signal Hill Petroleum has sponsored Movies in the Park since 2005, providing Partners of Parks with $27,500 to provide for 29 movies at various park sites. Expenses supporting this program were paid directly by Partners of Parks. The remaining amount of $7,675 in support of the program for staff and supplies was deposited to the General Fund, which offsets the requested increase in appropriation.
• Increase appropriations in the General Fund (GP) in the Parks, Recreation and Marine Department (PR) by $7,675.
Police
The Chief of Police authorizes the use of State Asset Forfeiture Fund - Youth Intervention/Prevention to allocate a total of $14,000 for at-risk youth programs among the NAACP’s Afro-Academic, Cultural, Technological and Scientific Olympics (ACT-SO), Long Beach Bar Foundation’s Short Stop Program, and Operation Jump Start Program.
The Chief of Police authorizes the use of Asset Forfeiture funds to cover the $9,996 for the replacement of expiring less lethal ammunition (tear gas and pepper spray). The requested increases in appropriation will be fully offset by Asset Forfeiture Funds.
• Increase appropriations in the General Fund (GP) in the Police Department (PD) by $23,996.
The Chief of Police authorizes the use of Prisoner Welfare Funds to cover $11,647 in costs related to prisoner welfare. The expenses include medical services, equipment repair, paint supplies and inmate clothing. The requested increase in appropriation will be fully offset by the Prisoner Welfare Fund.
• Increase appropriations in the General Fund (GP) in the Police Department (PD) by $11,647.
The operating budget for the North Long Beach PAL facility at 2311 South Street was reduced in FY 09 in anticipation that the City would find a sub-lessee for the remaining lease obligation. While a long-term sub-lessee was not found, in its stead Parks, Recreation and Marine is temporarily subleasing portions of the facility, while only covering their proportionate share of utilities. Revenue reserved from bus shelter advertising that was originally pledged to support the operating expense for the North PAL facility will offset a portion of the remaining unbudgeted lease expense.
• Increase appropriations in the General Fund (GP) in the Police Department (PD) by $231,776.
The State of California Citizens Option for Public Safety Program funding from the County of Los Angeles Supplemental Law Enforcement Services Fund (State COPS) grants has $213,099 in accumulated interest earnings as of July 28, 2011. These State COPS funds will be used to purchase a new voice recording system for the Police Department’s Communication Center for $70,000; purchase upgrades to the Department’s Tiburon System for $100,000; $33,099 for small equipment; and $10,000 for software system support costs. An appropriation increase is requested to allow for the utilization of these funds.
• Increase appropriations in the General Grants Fund (SR 120) in the Police Department (PD) by $213,099.
The Police Department’s Airport Security Unit’s FY 11 adopted expense budget is $265,713 less than the FY 11 PD/Airport MOU amount. This was due to the MOU not being approved until after the start of FY 11. This increase in expense appropriation is offset by a corresponding increase in revenue.
• Increase appropriations in the General Fund (GP) in the Police Department (PD) by $265,713
Parking Operations
During budget preparation last year, governmental reform changes resulted in several functions moving to various departments. One of those changes included the Parking Operations transfer from the Development Services Department to the Public Works Department. To properly align budgeted appropriations and expenses with the appropriate responsible department, $804,770 will be transferred from the Department of Development Services to the Department of Public Works.
• Decrease appropriations in the General Fund (GP) in the Development Services Department (DV) by $804,770
• Increase appropriations in the General Fund (GP) in the Public Works Department (PW) by $1,104,770
• Decrease appropriations in the General Fund (GP) in the Community Development Department (CD) by $300,000.
Public Works
State Proposition 42 transportation funding has generated interest earnings of $21,724, and an appropriation increase of the accrued interest is requested.
• Increase appropriations in the Gas Tax Street Improvement Fund (SR 181) in the Public Works Department (PW) by $21,724.
On November 3, 2009, the City Council authorized an agreement between the Orange County Transportation Authority (OCTA) and the City for the West County Connectors project, which provides for reimbursement of City costs incurred by the Public Works and Police Departments in support of detours and traffic control. The FY 11 costs for the project are estimated at $155,000, and since this expense is not budgeted, an appropriation increase is requested. This is a multi-year agreement, and a similar appropriation request will be submitted in FY 12 when the actual costs are known.
• Increase appropriations in the General Fund (GP) in the Public Works Department (PW) by $155,000.
On June 7, 2011, the City Council appropriated a total of $13,200,000 to begin work on high priority capital projects funded by Measure D oil revenue. Appropriations were placed in the Department of Parks, Recreation and Marine and the Department of Public Works. To facilitate project tracking, accounting and budgeting and ensure compliance with State reporting requirements, it is proposed that these Tidelands projects be consolidated under the City Manager Department, and the following appropriation adjustments are needed to transfer the projects’ budgets.
• Decrease appropriations in the Tidelands Operating Fund (TF 401) in the Parks, Recreation and Marine Department (PR) by $3,950,000.
• Decrease appropriations in the Tidelands Operating Fund (TF 401) in the Public Works Department (PW) by $9,250,000.
• Increase appropriations in the Tidelands Operating Fund (TF 401) in the City Manager Department (CM) by $13,200,000.
On June 7, 2011, the City Council requested an appropriation of funds from FY 11 Measure D oil revenue for the remaining unfunded portion of the Breakwater Study. This appropriation increase will fulfill the City Council’s request.
• Increase appropriations in the Tidelands Operating Fund (TF 401) in the City Manager Department (CM) by $820,700.
Technology Services
On July 5, 2011, the City Council authorized the City Manager to execute contracts for the purchase, implementation, and ongoing support of a utility customer information system (CIS) at a total cost of $14,906,302 over three fiscal years, FY 11 through FY 13. Technology Services will provide project implementation, including administration, accounting and project monitoring. Project costs will originate in the General Services Fund (IS 385) and will subsequently be allocated to the four enterprise operations (gas, water, sewer and refuse), which fund the City’s current utility billing function. Since project costs are not currently budgeted in the General Services Fund, an appropriation increase of $14,906,302 is necessary. This increase will be offset by revenue received from billings to the enterprise operations. With the exception of the Refuse Fund, sufficient funds are currently budgeted in participating departments to cover estimated FY 11 project costs of $1.23 million. There is no impact to the General Fund.
• Increase appropriations in the Refuse Fund (EF 330) in the Public Works Department (PW) by $322,585.
• Increase appropriations in the General Services Fund (IS 385) in the Technology Services Department (TS) by $14,906,302.
Citywide
On April 25, 2000, the City Council approved the creation of sales tax revenue sharing agreements with Edison Material Supply (EMS), which purchases equipment, machinery, supplies and other property for resale to Southern California Edison. Under the agreements, EMS receives 75 percent of the sales tax revenue they generate in Long Beach in excess of a $3 million base. EMS has generated more sales tax for the City in FY 11 than in prior years, and has exceeded the $3 million base by $7 million. As part of the Second Quarter budget adjustment on June 7, 2011, an additional appropriation of $3.1 million was approved to cover the growth in the EMS rebate to that point in time. Another appropriation increase is needed to cover the increased rebate of sales tax revenue for FY 11, and will be fully offset by the revenue growth.
• Increase appropriations in the General Fund (GP 100) in the Department of Citywide Activities (XC) by $1,750,000.
Pursuant to new guidance published by the Governmental Accounting Standards Board (GASB) to standardize financial reporting, a general debt service fund must be used to account for resources legally mandated or accumulated for the payment of principal, interest and fiscal agent fees. The budget adjustments identified in the chart below will transfer appropriations from departments in order to consolidate existing debt service activity in the Debt Service Fund in the Citywide Department.
|
Department |
Fund |
|
|
General Fund |
Health Fund |
Housing Fund |
Belmont Shore Parking Meter Fund |
Debt Service Fund |
|
City Clerk |
(224,689) |
|
|
|
224,689 |
|
Development Services |
|
|
(813,764) |
(212,275) |
1,026,039 |
|
Fire |
(180,919) |
|
|
|
180,919 |
|
Financial Management |
(48,462) |
|
|
|
48,462 |
|
Public Works |
(1,984,909) |
|
|
|
1,984,909 |
|
Citywide |
(7,789,990) |
(298,865) |
|
|
8,088,855 |
|
Transfer to Citywide Debt Service Fund |
10,228,969 |
298,865 |
813,764 |
212,275 |
- |
|
Fund Impact |
- |
- |
- |
- |
$11,553,873 |
• Increase appropriations in the Debt Service Fund (DS) in the Department of Citywide Activities (XC) by $11,553,873.
The Open Space Bond debt service previously paid from the Capital Projects Fund will also be accounted for in the Debt Service Fund. It is recommended that two years’ of the Park Impact Fee portion of debt service for the Open Space Bond be reserved in the event that annual Park Impact Fee revenue is not sufficient to support the debt obligation for that year. An appropriation increase is necessary to enable the transfer of cash from the Capital Projects Fund to the Debt Service Fund where the reserve will be held.
• Increase appropriations in the Capital Projects Fund (CP) and in the Parks, Recreation and Marine Department (PR) by $500,000.
GASB guidelines include the appropriate accounting for municipal bonds related reserves. Therefore, the following items should be transferred out of the General Fund and into the Debt Service Fund: Long Beach Plaza 2001 Bonds, Parks and Open Space 2006 Bonds, Public Safety Facility 2002 Bonds, Town Centre 2004 Bonds and the Skylinks 2003 Bonds cash with fiscal agent accounts. As of June 30, 2001 these accounts had a balance of $5,965,000 and are estimated at $6,100,000 as of September 30, 2011. This appropriation increase will be fully offset by the transfer of restricted cash.
• Increase appropriations in the General Fund (GP) in the Department of Citywide Activities (XC) by $6,100,000.
As a result of the fund type definition review process required under GASB, the practice of depositing impact fee revenue to the Development Impact Fees Fund and subsequently transferring the cash to the Capital Projects Fund has been discontinued. Instead, all impact fees will be held in distinct subfunds in the Capital Projects Fund to match revenue with the project expenditures. As a result, the Development Impact Fees Fund requires an appropriation increase of $615,000 in order to transfer existing impact fee revenue to the Capital Projects Fund.
• Increase appropriations in the Development Impact Fees Fund (SR 180) in the Department of Citywide Activities (XC) by $615,000.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT/CFO
APPROVED:
PATRICK H. WEST
CITY MANAGER