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Home My WebLink AboutSS2 - Budget Overviewrc; ,v �Pqq O ELI ~FO Budget Overview City of Newport Beach Submitted by City !Manager Dave Kiff What we'll cover • Summary of Prior Year Actions (FY 09 -10, FY 10 -11) • Budget Principles • Year -End Close • Looking Ahead: — FY 11 -12 Revenue Projections — FY 11 -12 Expenditure Projections — Key Initiatives in FY 11 -12 — Program Changes • Information Technology Internal Service Fund • Department Adjustments — Critical Decision Points Prior Years' Budget Actions • Early Retirement Incentive Program (savings of $3.21VI annually) • Pensions (savings of Safety $964K and Misc $1.2M): • Outsourcing (savings of $1.11VI): • Vendor contract renegotiations - tree, landscape, and street maintenance • Increased revenues (almost $11VI): • Deferred some capital projects, more • Result: — Mid -year 2009 -10 projected deficit of $8M turns to $3M surplus —June 30, 2010 — 2010 -11 adopted budget is $18M lower than 2009 -10 adopted budget. Our Budget Principles 1. Build on prior years' actions. 2. Adhere to 2010's Fiscal Sustainability Plan. 3. Use the next 18 months to thoughtfully and deliberatively change the way local government does business. 4. Our city's long -term success depends upon our investment in infrastructure (streets, parks, facilities). 5. There are things we should not be doing. 6. Pension costs need to be addressed comprehensively and cooperatively. 7. Public Safety is paramount — but we need to be open to better ways of delivery public safety services. Fiscal Sustainability Plan (from the 2010 FSP) • Maintain appropriate cash reserves • Manage Facilities Financing Plan • Review revenue performance • Distribution of the second Quarterly Business Report is targeted for May 24, 2011. • Competitive contracting of services and equipment • Appropriate cost - recovery targets • Ensure fair compensation in partnership with our employees Kq FY 10 -11 Year -End Closing Projections GENERAL FUND FY 2011 ORIGINAL BUDGET VS. PROJECTED YEAR END 2010 -11 Original Budget Projected 2010 -11 Year End FY2011 SURPLUS/ (DEFICIT) AMOUNT FY2011 SURPLUS/ (DEFICIT) OVER BUDGET% GENERAL FUND REVENUES: PROPERTYTAXES $ 70,642,840 $ 71,574,069 $ 931,229 1.32% SALES TAXES 23,767,007 24,383,039 616,032 2.59% TOT TAXES 11,555,034 12,156,000 600,966 5.20% ALL OTHER GENERAL FUND REVENUES 39,175,789 39,545,785 369,996 0.94% PLANNED ADDITIONAL REVENUES /SAVINGS 2,297,108 - WA WA SUBTOTAL GENERAL FUND REVENUES $ 147,437,778 $ 147,658,893 $ 2,518,223 1.71 GENERAL FUND EXPENDITURES: GENERAL GOVERNMENT $ 16,390,830 $ 16,165,263 $ 225,567 1.38% PUBLIC SAFETY 76,878,354 75,828,696 $ 1,049,658 1.37% PUBLICWORKS 28,892,972 28,441,749 $ 451,223 1.56% COMMUNITY DEVELOPMENT 7,243,143 7,196,664 $ 46,479 0.64% COMMUNITY SERVICES 14,063,479 13,908,921 $ 154,558 1.10% OPEB 2,128,000 2,128,000 $ - 0.00% DEBT SERVICE 780,000 765,000 $ 15,000 1.92% CAPITAL PROJECTS 1,061,000 1,061,000 $ - 0.00% COUNCIL POLICY F2 APPROPRIATED RESERVE - 2,163,600 WA 2 $ 147,437,778 $ 147,658,893 $ 1,942,485 1.32% City of Newport Beach — FY 2011 -12 Proposed Budget LOOKING AHEAD An Expenditure Problem — Not a Revenue Problem • Fixed costs that are increasing — about t$6M: — Pensions and OPEB — Negotiated contracts and payroll requirements — Facilities Financing Plan — Unemployment costs • State cuts we have to absorb: — Library services —about j/$175K • Strategic needs that should be funded: — Streets, alleys, parks, more - t$W /year for now — IT to replace old systems - t$W /year for now • Budget Preparation assumed about 'I $81VI in these categories. • Budget Targets given to departments recommended about \,$73M • Result = 1.05% increase from FY 2010 -11 Actual to FY 2011 -12 Proposed. Bending the Cost Curve General Fund Revenues & Expenditures by Fiscal Year 165000000 155000000 145000000 N C O 135000000 125000000 115000000 O O An $8 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Actuals Actuals Actuals Actuals Actuals Proj. Proj. 0 — General Fund Revenues — General Fund Expenditures - -° General Fund Expenditures Projected without Reductions In order to keep a balanced budget, we needed to bring expenditures down to reflect reduced revenue. This chart shows where we'd be (in a deficit position) had we not cut our spending. City of Newport Beach — FY 2011 -12 Proposed Budget REVENUE PROJECTIONS FY 11 -12 Revenues —All Funds ■ Property Taxes - 32% ■ Sales & Other Taxes - 20% Other Revenue - <1% ■ Use of Money & Property - 9% ■ Fines, Forfeitures, & Penalties - 2% ■ Charges for Services - 6% a Intergovernmental Revenue -4% Licenses, Fees, & Permits - 2% Enterprise Fund Revenue - 12% a! Internal Service Fund Revenue - 12% erty Taxes & Other Taxes rRevenue >f Money & Property Fines, Forfeitures, & Penalties Charges for Services Intergovernmental Revenue Licenses, Fees, & Permits Enterprise Fund Revenue Internal Service Fund Revenue Total Revenues $ 72,155,615 45,977,167 902,600 21,072,380 3,604,800 13,920,880 10,031,827 5,501,829 26,405,561 26,683,460 226,256,119 11 FY 11 -12 Revenues — General Fund • Property Taxes - 48.4% • Taxes Other Than Property - 30.8% Licenses and Permits - 2.5% • Intergovermental -1.1% • Charges for Current Services - 9.3% Fines, Forfeitures & Penalties -2.4% Use of Money and Property - 5.2% Other Revenue - 0.2% I Taxes )ther Than Property Licenses and Permits Intergovernmental Charges for Current Services Fines, Forfeitures & Penalties Use of Money and Property Other Revenue $ 72,155,615 45,977,167 3,781,829 1,660,748 13,858,880 3,604,300 7,801,469 364,600 $ 149,204,608 12 Revenues — Top Three Categories Revenue (in millions) FY 08 FY 09 FY 10 FY 11 FY 12 Property Tax $67.4 $70.1 $72.0 $71.6 $72.2 +0.8% Sales Tax 30.5 25.9 22.4 24.8 25.5 +3.0% TOT 12.8 11.2 11.4 12.1 12.8 +5.2% Total $110.7 $107.20 $105.80 $108.5 $110.5 City of Newport Beach — FY 2011 -12 Proposed Budget EXPENDITURE PROJECTIONS FY 11 -12 Expenditures —All Funds ■ Salaries & Benefits - 48% ■ Maintenance & Operations - 26% f Capital Outlay - 1% ■ Debt Service - 5% ■ CIP - 20% Waries & Benefits Maintenance & Operations apital Outlay Debt Service CIP $ 122,278,949 65,283,522 3,276,589 13,536,677 51,176,740 $ 255,552,477 15 FY 11 -12 Expenditures — General Fund ■ Salaries & Benefit (D 69% ■ Maintenance & Operations - 27% r Capital Outlay - <1% ■ Debt Service - 1% ■ CIP 3% & Benefits _...__nance & Operations Capital Outlay Debt Service CIP $ 102,941,014 39,780,303 365,589 780,000 4,567,100 $ 148,434,006 16 City of Newport Beach — FY 2011 -12 Proposed Budget DEBT SERVICE 17 General Fund Supported Debt $8,828,801* *Includes Balboa Parking Lot Loan and 2010 COP net of Federal Subsidy ■ Net Debt Service ■ All Other General Fund Exp Lm City of Newport Beach — FY 2011 -12 Proposed Budget INTERNAL SERVICE FUNDS 19 FY 12 Internal Service Fund Expenses • Equipment Replacement - 12.8% • Equipment Maintenance - 9.4% • Compensated Absences - 9.5% • Workers' Compensation -11.2% • General Liability -10.4% • Retiree Medical Insurance - 27.7% a Information Technology -18.9% Equipment Replacement Equipment Maintenance Compensated Absences Workers' Compensation General Liability Retiree Medical Insurance Information Technology $ 2,899,500 2,116,065 2,154, 247 2,535,325 2,349,380 6,259,000 4,271,669 $22,585,186 12.8% 9.4% 9.5% 11.2% 10.4% 27.7% 18.9% 100% 20 Information Technology Internal Service Fund • New for FY 2011 -12 — Responds to the recommendations from the Citizen's Technology Task Force Report commissioned by the Council — Supports the City's need to use technology effectively — including e- government and especially "performance management" — Will be used to fund key upgrades identified in the City's 5 year IT Strategic Plan now underway 21 City of Newport Beach — FY 2011 -12 Proposed Budget PENSIONS AND INFRASTRUCTURE $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Pension Costs 21.08% 2005 1 2006 7.59% 2007 5.74% 2008 15.84% 2009 (2.84 %) 2010 15.14% 6.47% 9.17% 2011 1 2012 1 2013 1 2014 Total Payments to PERS (ER & EE) 12,441,624 15,064,213 116,207,423 17,137,771 19,852,453 1 7 21,056,315 24,245,063 25,814,241 Total City Paid 12,441,624 15,064,213 16,207,423 16,453,906 $11,124,682 18,405,078 17,648,479 18,351,155 20,425,286 21,655,007 1 $18,101,066 24,901,223 L: Employer $7,858,785 $10,191,613 $11,148,523 $12,749,804 $1 32 $13,616,608 $16,973,492 $2 1I • Employee Misc (Contribution) 0 0 0 $683,865 $1,447,375 $1,466,524 $1,734,156 $2,848,773 $3,159,100 $3,190,691 Employee Safety (Contribution) 0 0 0 0 0 $173,224 $971,004 $971,004 $1,000,134 $1,030,138 • EPMC $4,582,839 $4,872,600 , $5,058,900 $5,32— 9,22 $5,655,274 $5,536,447 ! $4,734,547 $3,451,795 $3,553,940 1 $3,630,805 By 2013 -14, the City will pay almost $25 million to PERS for pensions (green plus blue). This is a $7.3M increase from 2009 -10. City's goals: Reduce the blue part + reduce payroll and 2nd Tier to shrink the green part. 73 General Fund Expenditure Estimates ■ Salaries & Benefits (no PERS) ❑ Pension Operations & Mtce. Facilities Financing Contribution ■ CIP Contribution (Streets /Lights) $185,000,000 $175,000,000 $165,000,000 $145,000,000 $135,000,000 $125,000,000 $115,000,000 $105,000,000 $95,000,000 $85,000,000 $75,000,000 $65,000,000 $55,000,000 $45,000,000 $35,000,000 $25,000,000 FY 2010 -11 FY 2011 -12 FY 2012 -13 FY 2013 -14 GENERAL FUND EXPENDITURE ESTIMATES FY 2010 -11 ■ Salaries & Benefits (no PERS) o Pension Operations & Mtce. Facilities Financing Contribution ■ CIP Contribution (Streets /Lights) FY 2013 -14 ■ Salaries & Benefits (no PERS) ■ Pension Operations & Mtce. ■ Facilities Financing Contribution ■ CIP Contribution (Streets /Lights) 25 City of Newport Beach — FY 2011 -12 Proposed Budge. DEPARTMENTAL ADJUSTMENTS FY 12 Department Adjustments Reduced Adjustment Staff Operating Increased Department Total Reduction Costs Revenues Other Administrative Services $ 210,000 X X Community Development 804,000 X X X City Council 45,000 X City Attorney 338,881 X X City Manager 171,000 X X Fire 1,504,858 X X X Human Resources 63,800 X Library 248,752 X X MOD (General Fund Only) 1,627,400 X X X Police 1,944,747 X X X Public Works 558,321 X X Recreation 265,921 X X Notes: "Other" for HR = renegotiated contracts. MOD = reductions in equipment /fleet. For Police, A.B.L.E. revenue reduction. 27 City of Newport Beach — FY 2011 -12 Proposed Budget COMPARISON OF STAFFING LEVELS Comparison of Staffing Levels THREE -YEAR COMPARISON OF FULL -TIME POSITIONS GENERAL FUND TIDELANDS FUND WATER ENTERPRISE FUND SEWER ENTERPRISE FUND EQUIPMENT FUND INFORMATION TECHNOLOGY FUND TOTALS Original Original Proposed Variance 2009 -10 2010 -11 2011 -12 from 2009 -10 F/T F/T F/T F/T 763.00 735.00 664.00 -99.00 7.00 5.00 5.00 -2.00 35.00 37.00 38.00 3.00 13.00 15.00 15.00 2.00 15.00 13.00 13.00 -2.00 0.00 0.00 22.00 22.00 833.00 805.00 757.00 -76.00 Notes: Above schedule does not include full -time equivalent staffing (part -time employees like seasonal guards, marine life protection rangers, parking lot attendants, library pages, more. The proposed budget has 127.85 part -time FTEs, down from 142.31 part -time FTEs in Original FY 2009 -10. 29 am LIMIJ ON 760 740 720 700 Historical Full Time Positions 2002 -03 2003 -04 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2009 -10 2010 -11 2011 -12 Actual Actual Actual Actual Actual Actual Actual Actual Estimated Proposed 30 City of Newport Beach — FY 2011 -12 Proposed Budget STRATEGIC EFFORTS IN FY 1142 Are We Done Yet? • Achieve City Council's 2011 Goals, more specifically... • Goal #4 — Pension Reform via: — Contract Negotiations • Focus on pensions, EPMC, more. • Goal #5 — City Restructuring: — Continued Analysis Restructuring Opportunities • Municipal Operations • Public Safety Services • General Government — Regional Collaboration — Internal Collaboration City of Newport Beach — FY 2011 -12 Proposed Budget DEPARTMENT ADJUSTMENTS Police Department • Core Responsibilities to the Community • Respond to Emergency Calls for Service • Investigate Crimes and Arrest Suspects • Traffic Safety • Suppress Crime and Improve Quality of Life • Budget and Realignment Philosophy • Increase Number of Officers in the Field (Patrol) • Reduce Number of Officers Behind Desks • Civilianize Sworn Positions where Feasible • Improve M &O Efficiencies (training, maintenance, computers, etc.) • Reductions in Overtime Police Department • Chief of Police Division ($540,000 savings) • Eliminate Two Officer Positions —► Officers to Patrol • Eliminate One Sergeant Position Sergeant to Patrol • Convert Lieutenant Position to Sergeant --+ Lieutenant to Patrol • Convert Part -time Crime Prevention Specialist to Full -time • Support Services Division ($340,000 savings) • Convert Captain Position to Civilian Administrator Position • Eliminate One Officer Position and One Senior Community Services Officer Position • Detective Division ($420,000 savings) • Eliminate Two Detective Positions --+ Officer to Patrol • Convert Court Liaison Officer Position from Detective to Community Services Officer —+ Officer to Patrol Police Department • Traffic Division ($842,000 savings) • Eliminate Three Officer Positions --+ Officer to Patrol • Eliminate Three Parking Control Officer Positions • Eliminate One Animal Control Officer Position • Patrol Division • Convert Captain Position to Assistant Chief • Add Lieutenant Position • Add Two Sergeant Positions • Add Two Officer Positions Police Department Net Reductions to PD Personnel Includes positions held vacant during current FY that are being eliminated 13 - Full -time Sworn Officers 8 - Full -time Non -Sworn 7 - Part -time Non -Sworn 149 to 136 89 to 81 40 to 33 Increases in Sworn Officers to Patrol • 6 Sworn Officers Immediately • Actively Recruiting to Fill 6 Additional Vacancies Police Department • Positive Impacts for Community • Faster Response Times • Greater Crime Suppression Efforts • Higher Visibility — sense of security /deterrent • Increased Officer Safety • Patrol Scheduling • Reduction of Overtime • Impacts of Budget Reductions to Community • Reduction in Community Relations • No DARE Program • Reduction in Vice and Narcotic Investigations • Reduction in Traffic Enforcement • No Longer take Non - Injury Traffic Accident Reports • Overall Reduction in Sworn Personnel _;18 Police Department • AirBorne Law Enforcement (ABLE) — Vetting Options /Direction • Continue Program without Costa Mesa • Contract with Other Police Agency • Transfer Assets to a Private Sector and Purchase Flight Time after RFP • No Helicopter Service (not recommended) • Others? Fire Budget Development Parameters • Maintain excellent, professional service • Promote and support safe operations • Refine Department to enhance: — career development — succession planning — efficient operations • Adjust personnel assignments to share expertise and maximize talent: — within Department and throughout City 40 Fire Budget Development Actions • Reduce Fire Chief direct - reports from 11 -5 — Assistant Fire Chiefs: ® Operations • Prevention and Preparedness — Lifeguard Division Chief — Budget Analyst • Reduce organizational divisions from 9 -4 • Reduce overall staffing by 13.8 FTE's Fire Budget Development Actions • Actively recruit /hire to maintain constant staffing and reduce overtime • Pursue adjustments to standby /call back /dynamic staffing processes to reduce overtime and enhance efficiencies • Evaluate and refine job descriptions: — Chief Officers — Lifeguards — Specialty Assignment Personnel — Fire Prevention Officers Fire Budget Development Actions • Refocus personnel assignments to consolidate /maximize expertise: — Junior Lifeguards - Community Preparedness — Fire Prevention - Community Education - PIO — Disaster Preparedness - Grant Acquisitions — Department Assistants - provide support across division lines — Field Support Services - Operations Personnel - MOD Personnel - out - sourced Fire — Current Organization Deputy Disast. Chief Prep Ops Coord Dept. BC BC BC BC Asst. Ops Ops Ops LG (A) (B) (C) (A) Info Sr. Syst. Fiscal Coord I I Clerk BC LG (B) EMS Mgr Dept Asst. Fire Chief Admin Assist. Office Training Comm Assist. Chief Prep Coord Field Fire Supp! Marshal Supp Sery Dept LG De t. Fire Fire Plan Educ P P Comm Assist Jr. LG Asst. Inspect Inspect Check Coord M, Fire — Proposed Organization 45 Lifeguard Operations Organization Adjustment Considerations • Lifeguard Division: — addresses a unique and specific public safety application — requires focused expertise in management with direct access to the fire chief — must be equipped with a staffing model that is: • flexible with regard to weather and ocean conditions • efficient and capable to address surge capacity needs • based upon reliable, historical data to target seasonal trends in deployment requirements — must excel in the delivery of community preparedness and youth programs — must maintain service excellence, safety, and professionalism Li'i Lifeguard Operations Organization Adjustment Pertinent Data • Rescues (6 year sample 2005 -2010) — 97% occur between May 11t and Sept. 30th — 99% occur between April 1St and Sept. 30th 3000 2500 m 1500 1000 500 Lifeguard Operations -2010 -2009 -2008 -2007 -2006 -2005 m 1800 1600 1400 1200 1000 800 600 400 200 Lifeguard Operations Average Rescues - 2005 -2010 0 Jai lac Jai aoc Q as` � Q�� P 'oe� o0et '0et eg Qc SeQ�yco O`c �o,¢co Oe`z 'p Average Rescues - 2005 -2010 17% May 1 -Sept 30 191% April 1 -Sept 30 49 Lifeguard Operations Organization Adjustment Actions • Establish Lifeguard Division Chief • Reduce full- time -sworn permanent staff from 16 to 8 (13 to 8) • Add 4 PT permanent staff (May- Sept.) • Assign Community Preparation Coordinator to Lifeguard Division (JG) • Increase call -back hours by 500 to address surge capacity needs • Address budget needs for non - safety maintenance expenditures • Rename Battalion Chiefs - Section Chiefs • Eliminate Officer classification - Captains �I Captain Officer Lifeguard Operations Battalion Chief Shift A Captain I I Captain Current Budget Captain I I Captain Officer Battalion Chief Shift B Captain Officer Captain Battalion Chief JG Training Captain I I Captain 51 Lifeguard Operations Battalion Chief Shift A Captain I I Captain I I Captain Officer Officer Current as Deployed (Vacancies in yellow) Captain I I Captain Officer Battalion Chief Shift B Captain Officer Captain Battalion Chief JG Training Captain I I Captain 52 Pertinent Data — Current Budget - 16 Permanent Staff • 7 assigned per shift A and B (overlap 4/10) • 2 Junior Guards and Training (4/10) • Wednesdays 16 (overlap 4/10 schedule) — Current Deployment with vacancies - 13 • 6 assigned per shift A and B (overlap 4/10) • 1 Junior Guards (4/10) • Wednesdays 13 (overlap 4/10 schedule) — Lifeguard staffing policy allows minimum staffing to 3 Permanent Staff • Routinely staff to 5, 4, or 3 in the low- season Lifeguard Operations Section Chief LG Captain LG Captain LG Captain .42 FTE LG Captain .42 FTE Division Chief LG Section Chief LG Captain LG Captain LG Section Chief Comm Programs /Supp. Sery Prep Coord LG Captain Organization Adjustment .42 FTE Actions Proposed LG Captain .42 FTE 54 GENERALFUND FY 2011 and FY 2012 BALANCED BUDGETS Projected Proposed FY 2012 FY 2010 -11 FY 2011 -12 Compared to FY Year End Budget 2011 as a GENERAL FUND REVENUES: PROPERTYTAXES $ 71,574,069 $ 72,155,615 0.81% SALES TAXES 24,383,039 25,088,167 2.89% TOT TAXES 12,156,000 12,786,000 5.18% ALL OTHER GENERAL FUND REVENUES 39,545,785 39,174,826 -0.94% SUBTOTAL GENERAL FUND REVENUES $ 147,658,893 $ 149,204,608 1.05% GENERAL FUND EXPENDITURES: GENERAL GOVERNMENT $ 16,165,263 $ 13,444,534 - 16.83% PUBLIC SAFETY 75,828,696 75,559,796 -0.35% PUBLIC WORKS 28,441,749 30,517,819 7.30% COMMUNITY DEVELOPMENT 7,196,664 8,360,533 16.17% COMMUNITY SERVICES 13,908,921 15,160,522 9.00% OPEB 2,128,000 2,314,000 8.74% DEBT SERVICE 765,000 780,000 1.96% CAPITAL PROJECTS 1,061,000 2,000,000 88.50% COUNCIL POLICY F-2 APPROPRIATION RESERVE 2,163,600 1,067,404 0.00% $ 147,658,893 $ 149,204,608 1.05% Conclusion • Year -end will close balanced. • Proposed budget balanced and: — Protects critical services — Restructures the organization for efficiency, eliminating about 35 positions (approximately 19 layoffs) — Provides more for facilities, streets, roads, IT — No use of reserves for operating purposes — Asks for continued work in contracting out — Asks for continued work on pension changes City of Newport Beach FY 2011 -12 Proposed Budget QUESTIONS 57