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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: ASSISTANT CITY MANAGER DATE: JUNE 3, 2003 SUBJECT: ADOPTION OF THE CITY BUDGET AND EMPLOYEE SALARY RANGES FOR FISCAL YEAR 2003-2004 RECOMMENDATIONAfter conducting a public hearing on the proposed Two-Year City Budget: 1) Adopt Resolution No. 2003- ; approving the City Budget for Fiscal Year 2003-2004; and, 2) Adopt Resolution No. 2003- ; establishing salary and hourly ranges for competitive and management employee job classifications. BACKGROUND As part of the two-year budget preparation process for FY 03-04 and FY 04-05, the City Council conducted two Budget Policy Issues Workshops on April 14 and April 29, 2003 and a Budget Work Session on May 10, 2003. Due to the on-going state budget crisis, staff first prepared a "baseline" budget of $10.7 million, with a "menu" of discretionary budget items for Council’s consideration. After working through the menu, Council directed staff to include an additional $1 million in program expenditures in the City Budget for FY 03-04. As of the May 10th Budget Work Session, FY 03-04 General fund expenditures were estimated to be approximately $11.7 million. Following the Budget Work Session, staff made final adjustments to the budget document to incorporate the Council’s direction, as well as a series of small changes that had come to staff’s attention since the preparation of the draft budget document. These changes affected both expenditures and revenues, resulting in $11.6 million in net General fund expenditures in FY 03-04 and $12 million in FY 04-05, and also created a small net excess of revenues over expenditures in each fiscal year. The City also maintained an estimated General fund balance in excess of $8 million in both fiscal years.
As mentioned previously, several small changes that have developed over the last few weeks resulted in a decrease in estimated General fund expenditures in FY 03-04. For example, the City recently opened contract bids for street sweeping and found that new prevailing wages and environmental regulations have increased the General fund contribution to this contract by an additional $10,000. On the other hand, staff anticipated a 3% increase in the Sheriff’s contract in the draft budget, but recently received confirmation that the actual increase will be 2.6%, resulting in a $30,000 decrease in expenditures for public safety. These examples illustrate the dynamic nature of the budgeting process. DISCUSSION Staff would like to review a few items for the Council prior to the adoption of the FY 03-04 City Budget. These items are discussed below: 1. Discretionary Budget "Menu" Items On May 10th, Council reviewed the budget policy "menu" and selected approximately $1 million is discretionary expenditures to incorporate into the baseline budget. The final list of discretionary items and their funding levels (which total less than $1 million) are summarized in the following chart:
With the exception of the Employee Merit Pool, which is discussed below, all of the discretionary items shown on the chart above have been incorporated into the revised budget document. Regarding City Grants, on May 10th Council decided to fund this program at a $30,000 level. Staff was directed to work with Mayor Pro Tem Ferraro to divide this amount among the grant applicants, based on certain criteria, and to provide the Council with the resulting list for later review and approval. As of the preparation of this report, staff and the Mayor Pro Tem are still working on the allocations. Because the list of grant recipients does not need to be finalized before the adoption of the budget, staff has simply included a $30,000 "place holder" in the revised budget document. With regard to the CORE Deputy Program, in the draft budget document presented to Council on May 10th staff estimated that funding two deputies would require a $30,000 transfer from the General Fund. However, after re-calculating the cost of reducing the program from three deputies to two, staff determined that a $24,000 transfer would be required, resulting in a $6,000 reduction in the amount of General funds required to support this program in FY 03-04. This change has also been included in the revised budget document. 2. Recommended Merit Pool and Salary Range Adjustments The City typically uses the March Consumer Price Index (CPI) to determine the annual employee merit pool and to adjust the salary ranges for each of the City’s job classifications. At the time the "baseline" budget was prepared, staff used the January 2003 CPI of 3.5%. The March 2003 CPI was released last week and shows an increase of 3.9% over the previous twelve months. Staff has calculated the difference between the two rates and determined that using the March 2003 CPI would increase the employee merit pool by approximately $10,000, which has been incorporated into the revised budget document. Staff recommends that the employee merit pool be set at 3.9% of payroll, consistent with the City’s past practice of using the March CPI. Similar to the merit pool, staff recommends that the salary ranges for each City job classification be adjusted based on the March 2003 CPI (see attached draft resolution). In addition, the attached resolution continues the monthly car allowance for Department Heads and the Assistant City Manager established by the Council in 1999. Generally, adjustments to the City’s salary ranges and hourly rates do not result in employees receiving automatic increases. However, because the City has filled several positions over the last year at the bottom of the current ranges, the salaries of five full-time employees and eight part-time employees would fall below the range after the new schedule goes into effect on July 1, 2003. In order to bring these employees within their new ranges, staff has included approximately $2,000 in the revised budget document. With the exception of these few adjustments, the existing method of employee compensation, whereby the amount of any salary adjustment is based on an employee's annual performance evaluation, will remain in place. CONCLUSION Based on the direction provided at the May 10th Budget Work Session, staff has revised the draft budget document and prepared a budget resolution for FY 03-04 for the Council’s consideration. When the final budget document is printed, it will indicate that the first fiscal year (FY 02-03) has been "adopted" and the second fiscal year (FY 04-05) is "proposed." If the Council desires to make any additional changes to the City Budget, they can be read into the record during tonight’s budget hearing. As discussed above, staff has also incorporated a variety of revisions to the budget document to reflect staff’s current understanding of expected expenditures and revenues over the next two fiscal years. The resulting budget for both FY 03-04 and FY 04-05 is balanced (expenditures do not exceed expected revenues) and General fund expenditures will not exceed the $11.7 million cap established by the City Council. Staff has also prepared a resolution to adjust the City’s salary ranges and hourly rates based on the CPI over the last twelve-month period (March 2003 CPI). The City Budget for FY 03-04 is now being presented to the Council at a public hearing for review and adoption. Respectfully submitted:
Carolynn Petru Assistant City Manager Reviewed,
Les Evans City Manager Attachments: Resolution No. 2003- ; Approving a budget appropriation and adopting the operating and capital improvement budget for Fiscal Year 2003-2004 Resolution No. 2003- ; Adopting salary and hourly ranges for all competitive and management employee job classifications RESOLUTION NO. 2003- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES APPROVING A BUDGET APPROPRIATION AND ADOPTING THE OPERATING AND CAPITAL IMPROVEMENT BUDGET FOR FISCAL YEAR 2003-2004. WHEREAS, on May 10, 2003, the City Council conducted a public workshop to review the proposed budget for fiscal year 2003-2004; and WHEREAS, on June 3, 2003, the City Council conducted an advertised Public Hearing to receive public input regarding the proposed budget for fiscal year 2003-2004; BE IT, THEREFORE, RESOLVED BY THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES: Section 1: That an Appropriation-Expenditure Budgeting Program showing budgetary categories by department is hereby adopted. By fund the adopted budget is per the attached Exhibit A with a total Estimated Beginning Unreserved Fund Balance of $17,732,832 and a total Estimated Ending Unreserved Fund Balance of $17,857,160. A. The City Manager is authorized to transfer certain Budget Appropriation Balances within functions and/or programs when he deems it necessary to do so in accordance with Chapter 3.32 of the Rancho Palos Verdes Municipal Code. B. Council approval will be required for any significant changes involving increased or decreased service levels. C. The Finance Director shall be responsible for constant monitoring of the budget and shall establish and implement appropriate control mechanisms necessary for said purpose, after approval of the City Manager. D. Deflator - A deflator procedure, to be administered by the City Manager, is hereby established for reducing appropriations in the event that projected revenues are reduced due to a reduction in the State subventions or other revenues that may fluctuate downward due to changes in economic conditions. For Fiscal Year 2003-2004, if total revenues, as estimated by the Finance Director, are insufficient, the amount of total Operating and Capital Budget Appropriation shall be reduced, as determined by the City Manager based on his assessment of total City needs. The City Council will be notified of any action regarding the Deflator within 15 days. Section 2: The 2003-2004 Revenue Budget is hereby adopted, establishing the following revenue and internal service fund contribution levels:
General Fund $11,719,406 Capital Improvement Projects Fund 1,531,447 Utility Undergrounding Fund 4,300 Roadway Beautification Fund 8,100 Street Maintenance Fund 844,900 Landscape/Street Lighting (1972 Act) Fund 329,210 El Prado Lighting District Fund 1,400 Community Development Block Grant Fund 1,207,863 Street Lighting (1911 Act) Fund 330,800 Beautification Fund 213,400 Waste Reduction Fund 143,739 Air Quality Management Fund 48,800 Street Improvement/Transit (Proposition C) Fund 532,298 Transit (Proposition A) Fund 594,123 Public Safety Grants Fund 115,480 Habitat Restoration Fund 2,100 Subregion One Maintenance Fund 16,100 Parks/Building Maintenance (Measure A) Fund 41,900 Abalone Cove Sewer District Fund 35,000 Park Development (Quimby) Fund 24,630 Affordable Housing In-Lieu Fund 20,100 Development Impact Mitigation (EET) Fund 225,520 County Park Bond (Measure A) Act Fund 155,913 Operating & Capital Fund Total $ 18,146,529 Internal Service Funds Contributions & Revenue: Equipment Replacement Fund $ 479,620 Building Replacement Fund 27,700 Employee Benefits Fund 770,342 Internal Service Fund Total $ 1,277,662 Section 3: The 2003-2004 Budget is hereby adopted, establishing the following transfers into the following funds: General Fund $ 470,810 Capital Improvement Projects Fund 1,096,319 Street Maintenance Fund 777,190 Habitat Restoration Fund 76,752 Abalone Cove Sewer District Fund 15,000 Total Transfers In $ 2,436,071 Section 4: The 2003-2004 Budget is hereby adopted, establishing the following transfers from the following funds:
General Fund $ 1,132,575 Landscape/Street Lighting (1972 Act) Fund 371,190 Community Development Block Grant Fund 34,410 Waste Reduction Fund 74,000 Street Improvement/Transit (Proposition C) Fund 337,583 Transit (Proposition A) Fund 15,000 Public Safety Grants Fund 115,000 Parks/Building Maintenance (Measure A) Fund 41,900 County Park Bond (Measure A) Act Fund 155,913 Total Transfers Out $ 2,277,571 Section 5: The 2003-2004 Operating and Capital Improvement Budget Programs are hereby adopted, establishing the following allocations and directing the City Manager to amend the preliminary budget to reflect said amounts: City Council $ 91,626 City Attorney 700,000 City Manager 725,999 Administrative Services/City Clerk 278,315 Community Outreach 80,866 RPV TV Channel 33 10,000 Personnel 78,051 Finance 717,188 Information Technology – Data 435,541 Information Technology – Voice 66,117 Public Safety - Sheriff 2,752,046 Public Safety - Neighborhood Watch 2,700 Public Safety - Special Programs 30,778 Public Safety - Animal Control 110,406 Public Safety - Emergency Preparedness 99,761 Public Works - Administration 436,887 Public Works – Traffic Management 182,485 Public Works – Storm Water Quality 204,175 Public Works - Building Maintenance 370,075 Public Works – Parks, Trails & Open Space Maintenance 540,372 Public Works – Parks, Trails & Open Space Improvements 12,500 Planning 894,974 Building & Safety 559,415 Code Enforcement 117,407 View Restoration 365,124 Natural Community Conservation Planning 61,052 Geology 140,000 Recreation - Administration 369,148 Recreational Facilities 284,157 Recreation – Special Events 18,942 Recreation - Point Vicente Interpretive Center 142,681 Recreation - REACH 95,343 Subtotal General Fund $ 10,974,131 Street Maintenance – Pavement $ 439,481 Street Maintenance – Non Pavement 1,125,261 Traffic Management (Traffic Signal Maintenance) 80,416 Subtotal Street Maintenance Fund $ 1,645,158 Capital Improvement Projects Fund $ 2,622,066 Landscape/Street Lighting (1972 Act) Fund 55,678 El Prado Lighting District Fund 900 Community Development Block Grant Fund 1,173,453 Street Lighting (1911 Act) Fund 361,800 Beuatification Fund 233,996 Waste Reduction Fund 133,663 Air Quality Management Fund 42,000 Transit (Proposition A) Fund 441,295 Public Safety Grants Fund 43,479 Habitat Restoration Fund 100,000 Subregion One Maintenance Fund 24,000 Abalone Cove Sewer District Fund 50,000 Park Development (Quimby) Fund 37,500 Subtotal Allocations $ 5,319,830 Internal Service Funds: Equipment Replacement Fund $ 569,927 Building Replacement Fund 180,375 Employee Benefits Fund 768,942 Subtotal Internal Service Allocations $ 1,519,244 Total Allocations $ 19,458,363
PASSED, APPROVED and ADOPTED the 3rd day of June 2003.
___________________________ ATTEST: MAYOR _ _____________________ CITY CLERK State of California ) County of Los Angeles )ss City of Rancho Palos Verdes ) I, JO PURCELL, City Clerk of The City of Rancho Palos Verdes, hereby certify that the above Resolution No. 2003- was duly and regularly passed and adopted by the said City Council at regular meeting thereof held on June 3, 2003. ___________________________ CITY CLERK RESOLUTION NO. 2003- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES ADOPTING SALARY AND HOURLY RANGES FOR ALL COMPETITIVE AND MANAGEMENT EMPLOYEE JOB CLASSIFICATIONS, AND RESCINDING RESOLUTION NO. 2002-56. WHEREAS, as part of the 1995-96 fiscal year budget, the City Council directed staff to conduct certain compensation studies measuring compensation data from both the public and private sectors. The compensation studies indicated that most of the City's job classifications were below the market median; and, WHEREAS, on March 1, 1996, the City Council adopted Resolution No. 96-21 amending the salary ranges for all full-time employees and establishing the merit pool compensation system; and, WHEREAS, on July 15, 1997, following the adopting of the FY 1997-98 City budget, the City Council adopted Resolution No. 97-69 which adjusted the salary and hourly ranges by two (2) percent; and, WHEREAS, on June 3, 1998, following the adopting of the FY 1998-99 City budget, the City Council adopted Resolution No. 98-48 which adjusted the salary and hourly ranges by one and a half (1.5) percent; and, WHEREAS, in late 1998, staff conducted a salary survey modeled after the 1995 study using the same survey pool of public agencies and, when possible, the same comparable positions. Based on the results of the updated survey, staff determined that the salary ranges for 16 positions required adjustment in order to be within 5% of the market median so that all City's salary ranges continue to be competitive with the marketplace; and, WHEREAS, with the adoption of the FY 99-00 City budget, the City Council directed that the salary ranges for 16 job classifications be modified based on the 1998 salary survey. Further, the City Council directed that all City's salary and hourly salary ranges be adjusted two (2) percent based on the Consumer Price Index, so that all City's salary ranges continue to be competitive with the marketplace; and WHEREAS, on June 1, 1999, following the adoption of the FY 99-00 City budget, the City Council adopted Resolution No. 99-42, which modified the salary ranges for 16 job classifications based on the 1998 salary survey, adjusted the salary and hourly ranges by two (2) percent based on the Consumer Price Index and provided a monthly car allowance for certain job classifications; and, WHEREAS, on June 6, 2000, following the adoption of the FY 00-01 City Budget, the City Council adopted Resolution No. 2000-34 which adjusted the salary and hourly ranges by three and four tenths (3.4) percent based on the Consumer Price Index; and, WHEREAS, on June 5, 2001, following the adoption of the FY 01-02 City budget, the City Council adopted Resolution No. 2001-44, which adjusted the salary and hourly salary ranges by three and six tenths (3.6) percent based on the Consumer Price Index; and, WHEREAS, on July 2, 2002, following the adoption of the FY 02-03 City budget, the City Council adopted Resolution No. 2002-56, which established the salary and hourly ranges for selected classifications at the 75th percentile and by the Consumer Price Index of 2.8%; and WHEREAS, with the adoption of the FY 03-04 City budget, the City Council directed that all City's salary and hourly salary ranges be adjusted three and nine tenths (3.9) percent based on the Consumer Price Index for the preceding twelve month period, so that all City's salary ranges continue to be competitive with the marketplace; and WHEREAS, the adoption of the new salary ranges will not automatically result in the adjustment of any employee salaries. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS: Section 1: The success of any plan in the public or private sector is dependent upon occasionally adjusting the salary ranges to be competitive with the marketplace. Section 2: The salary and hourly ranges for City job classifications are adopted as outlined in the attached Exhibit "A." Section 3: Resolution No. 2002-56 is hereby rescinded. Section 4: A monthly car allowance for certain job classifications is adopted as outlined in the attached Exhibit "B." PASSED, APPROVED and ADOPTED this 3rd day of June 2003.
___________________________ MAYOR ATTEST:
_____________________________ CITY CLERK STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss CITY OF RANCHO PALOS VERDES )
I, JO PURCELL, City Clerk of the City of Rancho Palos Verdes, hereby certify that the above Resolution No. 2003- was duly and regularly passed and adopted by the said City Council at a regular meeting thereof held on June 3, 2003. ___________________________ CITY CLERK
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