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HomeMy WebLinkAbout07/25/2017 00 Distributed at the MeetingDistributed at the Meetings j 7 City of Yakima Financial Status Update to Council General Government and Other Funds of Interest as of June 30, 2017 General Government Reserve Balance Annual Revenues Expenses Net Rev (Exp) Beginning End/Current % of Exp 78,608,647 78,520,112 88,535 7,305,413 7,393,948 9.4% 2017 Amended Budget 2017 YTD Actual @ 6/30 Percent of Budget 37,709,527 38,400,293 (690,766) 7,933,127 7,242,361 9.4% 48.0% 48.9% As of June 30, both revenues and expenditures are running at just under 50% of budget. This is not unusual due to low activity in winter months. Also, the City does not do mid -year accruals for outstanding items such as unreceived grant revenue or unpaid invoices due. Actually, the savings on the expenditure side is noteworthy. Included in the Budget is a Vacancy Savings of $675,000 for 2017. General Government has already realized vacancy savings of this much so far in 2017. Other savings have been achieved through prudent spending decisions. Despite the savings, the numbers reflect a deficit of $690,766. This is partly due to revenues that trend upward in the latter half of the year; and certain annual charges for insurance that were made in the first half of the year which arbitrarily increase expenditures in this time period. Given these factors, the current deficit is not problemmatic; we should see revenues trend upward relative to expenditures in the second half of the year. The Risk Management Fund (discussed below) was entirely depleted in 2016 with the ACLU settlement payout. To shore up the fund to meet State required minimum reserve levels, the entire 2017 insurance charge plus an extra surcharge were assessed and are reflected in these expenditure numbers. The impact to General Government for the extra (unbudgeted) surcharge is $228,500 and the early (budgeted) 2nd half payment is $635,000. Combined, these entries account for $863,500 of expenditures that should be paid from revenues received and savings realized in the second half of the year and more than make up the deficit reflected in these numbers. Risk Management 2017 Amended Budget 2017 YTD Actual @ 6/30 Percent of Budget • Revenues Reserve Balance Annual Expenses Net Rev (Exp) Beginning End/Current % of Exp 4,078,528 3,913,381 4,603,720 2,771,008 112.9% 70.8% 165,147 1,403,627 1,568,774 40.1% 1,832,712 (951,265) 881,447 15.9% During 2016, the ACLU settlement of $1.846 million depleted the Risk Management Fund bringing the Reserve Balance to negative $951,265. The State requires a minimum Reserve Balance that addresses expected claim activity as of each year end. The Reserve requirement is estimated by the Legal Department based on pending claims against the City net of insured amounts. To shore up the fund as quickly as possible, the entire budgeted insurance charge was administered to each contributing fund early in 2017. Then, an additional 18% surcharge was administered to bring the reserve balance up to the required minimum. Continued on back side Health Benefit Reserve Reserve Balance Revenues 2017 Amended Budget 12,450,000 2017 YTD Actual @ 6/30 Percent of Budget 6,141,414 49.3% Expenses 12,308,313 6,510,651 52.9% Annual Net Rev (Exp) Beginning End/Current % of Exp 141,687 1,403,627 1,545,314 12.6% (369, 237) 1,900,393 1,531,156 11.8% 2017 has seen an unusual number (8 to 10) of large claims. Historically the City experiences 3 to 5 unusually large claims in a year. These claims have caused the expenditures in this fund to increase sharply in the first half of the year. Additionally, the fund reported an inadequate Reserve Balance at the end of 2016 of just $1.8 million which triggered an inquiry from the State. While the State requires a Reserve Balance of 16 weeks' expenditures (approximately $3.4 million or 30.8% of annual expenditures), they will accept the City's lower actuarially determined Reserve requirement of $2.3 million. This fund began to experience difficulty with rising health care costs several years ago. In response, a reference - based pricing model was implemented in 2015 which ultimately proved to be unsuccessful. While the initial appearance of savings seemed to be adequate to reduce premiums to the participating funds and to employees, ultimately there were no savings and the costs were essentially transfered to future years instead. Those prior year costs will have to be paid from reserves and cause additional assessments to participating funds in 2017. Budgeted allocations to vacant positions for healthcare have been transferred to the fund for the first half of 2017. A similar transfer will be done for the second half of the year, and if necessary, an unbudgeted surcharge will be imposed. The Insurance Board has been monitoring the situation and investigating various options to deal with the increasing costs. In the short term it is anticipated that assessments to participating funds will need to be increased. In the longer term it is hoped that incentives and new pricing strategies will curb cost increases as the comparison to externally run insurance plans continues to prove that our self-insured plan continues to be more cost efficient, despite recent difficulties. 2018 Budget Process Timeline and Deadlines July 5 Distribution of City Manager's Budget Guidelines — Available in Shared Budget Folder Finance emails to all Senior Staff, Division Managers and Department Assistants. July 10 Distribution of Finance Director's Budget Process and Budget Spreadsheet Instructions Distributed to all Senior Staff, Division Managers and Department Assistants by Finance. Saved in shared budget folder. July 10 New Policy Issue Request Template available in Shared Budget Folder Open and save a document for all potential 2018 Policy Issue Requests in order to develop a working list. Only brief summary now. Details can be provided later. July 10 2017 Payroll Budget Reports available in Shared Budget Folder Positions and Funding, Budget Distribution & Budget Distribution by Position July 11 2018 Payroll Budget Staffing Worksheets available in Shared Budget Folder Divisions should print their section and begin working on 2018 staffing changes. July 12 2018 Senior Staff Discuss 2018 Staffing Worksheets Discuss at Senior Staff — Staffing due July 19. Divisions print their section and make changes. If no changes, please print & submit "no changes" to Finance July 19 July 20 Budget Training Session at Senior Staff meeting and Division Manager meeting Discussion and training covering the entire budget process including Payroll Budgeting, Excel Budget sheets and Policy Issue requests. July 21 Completed 2018 Staffing Worksheets are submitted to Finance Finance inputs staffing adjustments to Payroll Budget System by 7/21 July 24 Year -End Estimates Completed including salaries and capital outlay for 2017 Divisions have entered year end estimates into budget worksheets. Finance prepares summary year end estimate report with Fund Balance estimate July 31 Excel budget sheets are completed for 2018 All budget data has been input to Excel sheets July 31 Policy Issue Requests are completed Requests to be included in the 2018 Preliminary Budget and those that can be postponed are noted as "future". Cost of request as well as any costs related to postponement must be estimated and provided in the document. Aug 1-9 Budget Meetings with Finance for complex budgets or as requested Please request a meeting if you exceeded your adopted 2017 budget or if you have a complex budget such as Police, Fire, Parks, Streets Aug 9 & 16 Administrative Budget Review with Senior Staff Review Policy Issue Requests, budgeted and unbudgeted, and other areas of concern. Aug 30 Preliminary Budget Freeze reviewed by Senior Staff Finance prepares initial Budget based on 2017 Year End estimates and 2018 data that has been submitted including Policy Issue requests. Budget Guidelines —1 Sep 1-13 Administrative Budget Reviews and Adjustments Budget review meetings are held as necessary with City Manager and Finance to make necessary adjustments and decide Policy Issue Requests. Sep 20 2018 Preliminary Budget is completed and presented to Senior Staff Preliminary Budget is completed with optimal Fund Balance result Optional Policy Issue Requests are finalized to show FB impact Minimum FB impact is zero or better (Le. Expenditures not allowed above reasonable revenue projection) Sep 30 Budget Narratives are developed and first draft is due to Finance Each department/division will prepare their budget narratives including statistical data for inclusion in the Adopted Budget document. Updates will be allowed for last minute changes due to public or Council input. Oct 10 General Government presentations to Council City Administration Community Development (Planning, Codes, LIFT, etc.) Human Resources including Benefit funds Legal, Risk Management, Finance, Debt, REET 1&2 Public Works (Engineering, Arterial Streets, Streets, Parks, Cemetery, Admin) Oct 12 General Government presentations to Council Police Fire and Emergency Preparedness Public Safety Communications (911 and Dispatch) Oct 17 Proprietary Funds presentations to Council Public Works (Equipment Rental, Refuse, Transit) Wastewater/Stormwater Water/Irrigation Airport Oct 19 Extra Council Budget Review session if required Nov 1 Publish Preliminary 2018 Budget online (with Clerk) as required by RCW Finance adjusts Preliminary budget as necessary and publishes online. Nov 7 Public Hearing on Ad Valorem (Property) Tax Council takes action on 1°/0 increase and total requested property tax for 2018 Nov 21 Public Budget Hearings The first of two required public hearings on the Budget Dec 5 Final Council Budget Review Meeting Finance prepares final summary of changes from the Preliminary posted budget. Dec 12 Council Passes Ordinance Adopting the 2018 Budget This can be done Dec 5 or Dec 12 Dec 15 Final Budget Narratives including all Policy Issues and all statistical data are due! Final narratives, approved/budgeted Policy Issues and statistics are finalized. Jan 8 Publish 2018 Adopted Budget online Budget Guidelines — 2 MINOR CHANGES Distributed at the Meeting 7 -as --1 1 ADDRESSING THE CITY COUNCIL The City Council welcomes input from citizens community members both -during "Audience -Public CommentsP-articipatien" So that everyone who wants to address the City Council has the opportunity to do so, you are asked to follow a few simple guidelines. 1. Please fill out this "Request for Appearance" form and hand it to the City Clerk before you address the City Council. 2. Comments are to be no longer than 3 minutes or no more than 2 minutes if there is a large agenda or multiple speakers. *If you are part of a group, please select a "spokesperson" to represent your group and assemble behind the "spokesperson.", An identified "spokesperson" will be allowed up to five 5 minutes to represent your group. Other d, state her or hisname7-and-say • - • - _ _ . by the "spokesperson. 3. Up to 30 minutes will be provided for "Audience Participation" near the start of each City Council meeting. Audience 4. regular -agenda -items, Councilmembers will listen to your concerns and may ask staff to research and report back on the issue but are unlikely to respond during the meeting. Gounoil-meetings, Participants are strongly encouraged to aid the Council in maintaining the decorum and orderly progression of the Council agenda. Engaging in personal attacks, use of profanity, disruptive noise, or comments that are off -topic detract from the ability of the Council to conduct business and are discouraged. 5. The City Council is a policy making body. Therefore, members cannot take action or investigate employee issues. Employee matters are the sole responsibility of the City Manager. If you have a complaint about City staff, please contact the City Manager prior to a Council meeting. *Note: You are also encouraged to submit comments to the City Council by mail, e-mail or in ways other than addressing the Council in person at a Council meeting.