STAFF REPORT. Overview:

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3 STAFF REPORT To: Honorable Mayor Berg and City Council Gary Klaphake, City Administrator From: Steve McFarland, Finance Director Date: September 17, 2018 Subject: 2019 City of Lafayette Budget, Workshop Session II Overview: In the September 4, 2018, Council Meeting (first budget session), the General Fund and several Exhibits of the proposed 2019 Budget were presented and reviewed. In this (September 17, 2018) session, Staff will present and review the remaining Funds in the City Budget, including the Debt Service, Capital (Legacy Open Space, Parks/OpenSpace/Trails (POST), Conservation Trust), Enterprise (Water, Water Reclamation, Storm Water, Golf Course), and Internal Service Funds (Employee Benefit, Insurance). The proposed 2019 Pay Plan is also addressed. From Budget Workshop I (September 4, 2018) Council made comments and asked questions concerning the 2019 Budget Exhibits. Staff issued a memo on September 5, 2018 that addressed the material comments; said items are not discussed in this memo. If there are further questions from Workshop I and the resulting memo, please let Staff know. Exhibit A In the first budget session, Exhibit A was examined, which provided a summary view of the General Fund. The September 4, 2018 versions of Exhibits A and C had a line item misplaced, which has been corrected. The Exhibits are reissued with this memo. There was no change to the bottom line. Highlights of the remaining Funds in Exhibit A: The Debt Service Fund (#11) currently houses the 2008 Street Improvement/Rec Center and 2016 Water Park issuances. The 2008 Bond is funded by Sales Tax, and matures in In 2017, voters approved a new issuance when the 2008 Series matures. The Water Park debt is funded by property tax and matures in The Fire & Ambulance Fund (#12) was merged with the General Fund in 2018 and is listed only to provide data from 2017 for comparative purposes. Legacy (#28) and POST (#29) are each funded by 0.25% sales tax. As Open Space Funds mature statewide, more focus is directed away from acquisition and towards maintenance of the open 1290 S. Public Road Lafayette, Colorado cityoflafayette.com

4 spaces that have been acquired. Legacy Fund capital items are listed in Exhibit C. POST Fund activity reflects 1) continued involvement with the GoCo Nature Kids project (grant money received and allocated) as well as 2) continued support of General Fund departments 420 (Parks/Open Space/ Golf Admin), 430 (Parks operations) and 435 (Open Space maintenance). The Conservation Trust Fund (CTF) (#30) is funded by 0.25% from State Lottery proceeds. Funding can be used for the acquisition, development and maintenance of new conservation sites or for capital improvements or maintenance for recreational purposes on any public site. Proposed CTF capital projects can be reviewed on Exhibit C. The Water (#41), Water Reclamation (#42) and Storm Water (#43) Funds are Enterprise Funds and are expected to be self-sustaining. Much thought is given to long-term planning and ratesetting, as capital needs in these Funds are extensive. The September 4, 2018 versions of Exhibits A and C had a line item misplaced, which has been corrected. The Exhibits are reissued with this memo. There was no change to the bottom line. The Water (2012 Bond maturing 2027) and Water Reclamation (2005 loan maturing 2021) Funds both service debt. The Golf Fund (#45) is also an Enterprise Fund, with much the same operational strategies as the Water-related Funds (create rate structure in accordance with current and long-term operational and capital needs). In 2019, The Golf Fund will dip into fund balance to acquire replacement golf carts. The Golf Fund is currently debt free. The Employee Benefit (#50) and Insurance (#53) Funds are Internal Service Funds, which means that they centralize revenues and expenditures for programs that have City-wide benefit. These Funds collect from the City s other Departments and Funds. Unlike the Enterprise Funds, they do not strive to accumulate fund balance as there are no associated capital requirements. Exhibit B An updated version of Exhibit B in included. The updates were discussed in the September 5, 2018 memo. Exhibit C A new Exhibit C has been issued. The only change is recognition of the line item that was misplaced in the September 4, 2018 version. Exhibit E Exhibit E is a schedule of all beginning and ending fund balances for City Funds, with ending fund balances for 2015, 2016, 2017, budgeted and midyear adjustments for 2018, proposed budgets for 2019, and projected ending fund balances for December 31, There is a column in Exhibit E that is labeled Mid-year Activity Each year, the current year s budget is amended as needed. Refinement occurs towards the end of the year as revenues and expenditures have materialized to the point where more accurate forecasts can be made. Staff has already recognized certain changes that will need to be made in revising the 2018 Budgets, and have entered placeholders as such. This column is not ready for discussion and is not part of the 2019 Budget approval process rather it is included to provide accuracy to estimated 2018 ending Fund balances S. Public Road Lafayette, Colorado cityoflafayette.com

5 Mid-year steps have been, or will be taken to address Funds that are struggling to achieve and maintain positive fund balance (Storm Water, Insurance) Pay Plan The Pay Plan is part of the annual Budget discussion and approval process. The City employs an independent consultant to assist in creating and maintaining a pay plan that considers both our competitive labor market (Brighton, Commerce City, Erie, Golden, Louisville, Northglenn and Wheat Ridge), and internal equity. The Pay Plan includes the addition of five positions for 2019: an animal control officer, 2 firefighter/emts, an open space ranger, and a sustainability coordinator. There are also adjustments for certain employees within existing pay ranges as appropriate. The Pay Plan increases for 2019 will be rolled out on a pay-for-performance plan, ranging from 0.0% to 4.5%, based on an employee s overall performance appraisal rating for Health insurance (Kaiser Permanente) is forecasted to increase ~8.4% in 2019, for which Staff is recommending that the City absorb. The following is a brief overview of the forecasted Pay Plan related costs for Proposed 2019 Pay Plan Information Increase Comments Full Time Employee Base $14,077,640 $14,847, % new positions not included New Positions (5) for 2019 $255,931 Health Insurance Increase $250, % Total increase $14,077,640 $15,353, % Other items The 2018 Lafayette Urban Renewal Authority Budget is not part of this approval process, but will be brought forward to Council before the end of the year. The GIDs (City Center, Exempla, Corporate Campus, Tech Center) have been listed with attached Exhibits A and E, but are approved in separate Council actions in the 1 st /2 nd budget meeting in October. Attachments: 2017 City Budget Exhibits: Exhibit A Exhibit B Exhibit C Exhibit E 1290 S. Public Road Lafayette, Colorado cityoflafayette.com

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62 Expenditures for Approval September 18, 2018 WT Arvada Pump Company Goose Haven Pump 4 repair 33, PW St Vrain Erosion Control Install 4 /12 valves and repair 12 valve 25, Install Fire Hydrant

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