SONOMA LOCAL AGENCY FORMATION COMMISSION

Transcription

1 SONOMA LOCAL AGENCY FORMATION COMMISSION Budget Committee Meeting Agenda Monday March 12, 2012 Board of Supervisors Caucus Room 575 Administration Drive Santa Rosa, CA :30 p.m. COMMISSIONERS/ALTERNATE COMMISSIONERS Pam Stafford, Chair Ray Brunton David Rabbitt Al Giordano, Alternate STAFF Rich Bottarini, Executive Officer Carole Cooper, Assistant Executive Officer Cynthia Olson, Clerk To speak on an item under discussion by the LAFCO Policy Committee on this agenda, you may do so upon receiving recognition from the Chair. State your name, for the record, before making your presentation. Time limitations on public testimony may be imposed at the discretion of the Chair. Meetings are taped. 1. Call To Order 2. Approval of Minutes of Meeting: January 25, General Public Comment: Only Items Not Considered On Regular Calendar 4. Review of Draft Proposed Budget Options 5. Adjournment In compliance with the Americans with Disabilities Act, if you need special assistance to participate in a LAFCO meeting, please contact the LAFCO Clerk at Notification at least 48 hours prior to the meeting will assist LAFCO staff in assuring that reasonable accommodations are made to provide accessibility to the meeting. Pursuant to Government Code Section 84308, if you wish to participate in the proceedings indicated on this agenda, you or your agent is prohibited from making a campaign contribution of $250 or more to any Commissioner or Alternate Commissioner. This prohibition begins on the date you begin to actively support or oppose an application before LAFCO and continues until three months after a final decision is rendered by LAFCO. If you or your agent has made a contribution of $250 or more to any Commissioner or Alternate Commissioner during the 12 months preceding the decision, that Commissioner or Alternate Commissioner must disqualify himself or herself from the decision in the proceeding. However, disqualification is not required if the Commissioner or Alternate Commissioner returns that campaign contribution within 30 days of learning both about the contribution and the fact that you are a participant in the proceedings. Pursuant to Government Code Sections and et seq., any person or combination of persons who directly or indirectly contributes $1,000 or more or expends $1,000 or more in support of or in opposition to a change of organization or reorganization that will be or has been submitted to the Sonoma Local Agency Formation Commission must comply, to the same extent as provided for local initiative measures, with reporting and disclosure requirements of the California Political Reform Act of Additional information can be obtained by contacting the Fair Political Practices Commission at (916) Pursuant to SB 343, any writings or documents provided to a majority of the members of the Commission regarding any item on this agenda after the posting of the agenda and not otherwise exempt from disclosure will be made available for public review at 575 Administration Drive, Room 104A, Santa Rosa, CA during normal business hours. If the supplemental materials are made available to the members of the Commission at the meeting, a copy will be available for public review at the same address and at the Commission meeting itself.

2 SONOMA LOCAL AGENCY FORMATION COMMISSION Draft Minutes of the Budget Committee Meeting Wednesday, January 25, 2012 Board of Supervisors Caucus Room 575 Administration Drive Santa Rosa, CA COMMISSIONERS/ALTERNATE COMMISSIONERS AND STAFF PRESENT Pam Stafford, Chair Ray Brunton David Rabbitt Al Giordano, Alternate Rich Bottarini, Executive Officer Carole Cooper, Assistant Executive Officer Cynthia Olson, Clerk 1. Call to Order: The Chair called the meeting to order at 2:07 p.m. The following voting members were present: Pam Stafford, Ray Brunton, and David Rabbit. 2. Approval of Minutes of Meeting: The minutes of the March 3, 2011, meetings were unanimously approved. 3. General Public Comment: None 4. Report of Actual Expenditures and Revenues through Second Quarter, : Staff summarized the actual expenditures and revenues through the second quarter Policy Direction: Fiscal Year Work Program and Budget: Staff summarized the achievements of the current fiscal year, to date, and outlined the proposed work plan for the upcoming fiscal year. Staff noted that: apportionments from funding agencies have been maintained at the same level for four years, relying on the use of reserves and processing fees to offset increases in expenditures; processing fees for the current year are substantially lower than in previous years, so that the fund balance may be too low to fully offset an increase in apportionments; and due to cutbacks and retirements at various public agencies and County departments and changed legislative requirements, staff spends more time educating and assisting other agencies and the public regarding LAFCO policies and procedures. Staff asked the Committee for direction as to the preparation of the proposed budget for FY including consideration of the minimum amount for the fund balance, the proposed work program and the minimum acceptable level of service. After substantial discussion, the Committee asked staff to return with more specific information on: 1. Projected revenues and expenditures in various scenarios, 2. Information on staff time usage, 3. Impacts on work program if staff time is reduced, and 4. Potential additional charges, such as less free consultation time and other revenue enhancements. 6. Confirmation of the Next Meeting: The next meeting will be held on March 12, 2012, at 1:30 p.m. 7. Adjournment: The meeting was adjourned at 3:30 p.m.

3 Item 4 LOCAL AGENCY FORMATION COMMISSION 575 ADMINISTRATION DRIVE, ROOM 104A, SANTA ROSA, CA (707) FAX (707) Staff Report Meeting Date: March 12, 2012 Agenda No.: Item 4 LAFCO File: Proposal: Environmental Determination: Contact: Fiscal Year Proposed Budget Staff requests Committee review of proposed budget options for Fiscal Year , which reflect variations in levels of agency apportionments, fund balance, and staffing. The Committee s direction will allow staff to prepare a Proposed Budget for the Commission s consideration at its April 4, 2012, meeting. Not a project under CEQA Richard Bottarini and Carole Cooper

4 ANALYSIS Background At the Budget Committee s January 25, 2012, meeting, staff initiated a discussion with the Committee regarding preliminary preparation of the Commission s Fiscal Year budget and work program. Staff presented a review of current-year goals and accomplishments to date as well as conceptual goals and proposed work program for Difficult economic conditions, which the County and some cities and special districts in Sonoma County continue to experience, provide the context within which the Commission s budget is being developed, in that these local government agencies, by law, fund LAFCO operations. Given such circumstances, to prepare a proposed budget for Commission review in April, staff requested direction regarding a budgetary target for , including consideration of whether current levels should be maintained or changed. During the course of the discussion, the Committee indicated that it needed more specific financial information to make determinations on these issues. Thus, the Committee directed staff to return at its March meeting with various expenditure and revenue scenarios, so as to make a recommendation to the full Commission. Variables In developing a budget to fund the Commission s operations, staff believes there are three factors or variables that affect the outcome: apportionments, fund balance, and staffing level. A change in the amount of any one of these can impact one or both of the others. For the Committee s consideration, staff has developed three scenarios that reflect changes in each factor. Before presentation of those options, some background and contextual information about each variable is provided below. Apportionments Pursuant to state law, the County, cities, and independent special districts share equally in the apportionment of the cost of LAFCO operations, with each group paying onethird. In 2004, in accordance with an allowed provision of the Cortese-Knox-Hertzberg Act, the County and a majority of cities and special districts agreed to a different formula wherein the County would pay 40 percent; the cities, as a whole, would pay 40 percent; and the independent special districts, as a whole, would pay 20 percent. This model has been used since that time. For the last four years, including the current year, the overall level of agency apportionments has remained basically stable, as is shown in the table below. Item 4 Page 2 of 14 March 12, 2012

5 Year Overall Agency Apportionment $405, $401, $402, $402,686 The Commission has been able to maintain this level of agency apportionment because revenues from application fees have been sufficient to supplement available funds in the Commission s fund balance to credit, or reduce, the real cost of apportionments. At the same time, as is discussed below, sufficient monies remained in the fund balance to provide for contingency needs of the Commission. It should be noted that the static level of overall apportionments does not necessarily apply to the amounts paid each year by individual agencies. Agency apportionments for a particular year are based on the most recent revenues reported to the State Controller s Office. Because an agency s reported revenues may vary from year to year, its apportionment may also change annually. For example, the City of Santa Rosa s apportionment for is $91,428, an increase of $15,455, or 20 percent, over its apportionment of $75,973. This reflects a substantial increase in revenues reported by the City in (the most recent year available) due to the sale of bonds and is unlikely to be repeated for subsequent years revenues. Fund Balance Fund Balance, sometimes also referred to as contingency or reserve, is an amount of money held in reserve to cover unexpected or non-budgeted expenses such as defending a legal challenge. For the first few years after LAFCO became an independent agency in 2001, the Commission did not allocate any reserve funds. In the Commission established its first undesignated/unreserved fund balance in the amount of $25,000. Since that time, the designated amount has increased, although it has varied from year to year. Through the years, when funds have become available due to greater fee revenue or less than anticipated expenditures, at staff s recommendation and as allowed in state law, the Commission has allocated a portion of the available fund balance to reduce agency apportionments for an upcoming year. While Commission policy is silent as to a specific amount, in its deliberations in March 2010, the Budget Committee recommended that the Commission maintain a fund balance of $40,000 with the intention of gradually increasing that amount to equal 25 percent of budget. A survey of such funds for Bay Area LAFCOs indicates that this is at the low end.¹ ¹ Based on information from other Bay Area LAFCOS, the following amounts are maintained: Alameda: contingency of 7% of operations +$120,000 fund balance; Contra Costa: $80,000 contingency + $120,000-$175,000 fund balance; Marin: $100,000 - $150,000; Napa: $105,000+/- (3 months of operating expenses); Santa Clara: $140,000 - $150,000; San Mateo: 3% of operations; Solano: $100,000 Item 4 Page 3 of 14 March 12, 2012

6 The level of fund balance monies projected to be available at the end of the current fiscal year may impact the Committee s recommendation of a budget option and the Commission s adoption of next year s budget. Available fund balance is a function of the level of both expenditures and revenues at year-end. Staff has completed initial projections for year-end expenditures and revenues in the following table. Specific projections for most sub-objects can be found in Attachment 1. It should be pointed out that, at this time, these projections are preliminary and will be refined in the coming months Adopted Budget Year-End Projected Difference Salaries-Benefits $ 408,045 $397,000 ($11,045) Services-Supplies $ 79,970 $ 72,370 ($ 7,600) Total Expenditures $488,015 $469,370 ($18,645) Apportionments $402,686 $402,686 $ 0 Other Non-Fee Revenues $ 6,740 $ 7,640 $ 900 Total Revenues $409,426 $410,326 $ 900 Fund Balance Monies Used to Balance Budget $ 78,589 $ 59,044 $19,545 These projected results, if they hold, will impact the level of fund balance, as follows: Ending Fund Balance, $139, Adopted Budget Fund Balance $ to Balance $ (78,589) Available Fund Balance Beginning $ 60,784 Projected Fee Revenue into Fund Balance $ 20,000 Difference between $ Needed to Balance Adopted Budget And Projected Year-End Amount $ 19,545 Projected Ending Fund Balance $100,329 Item 4 Page 4 of 14 March 12, 2012

7 Staffing The Commission s expenditure budget is comprised of two general categories: salaries/benefits and services/supplies. Staff is not proposing that items within the Services and Supplies budget be considered as an active variable in that, at 16 percent of the total, the amount of money is relatively minimal, and the funds budgeted, it is believed, are essential to the Commission s operation. The Services and Supplies budget covers the cost of running the LAFCO office, auditor and legal costs, professional training and memberships, and actions required by state law (e.g., providing legal notice in a newspaper). For , some of the costs associated with Services and Supplies will change from the current year thereby reducing this portion of the expenditure budget on its own. These changes include the following: (a) Audit An audit of Commission expenditures and revenues is conducted biannually and will not be prepared in Auditor Services will therefore decrease by $9,000 (this cost will increase again in FY ). (b) County Support Services - County charges to LAFCO, which include costs for energy, facility operations, insurance, building use, grounds maintenance, and auditor claims, will be reduced from $15,770 in the current year to $10,900 next year (this cost may increase for FY ). (c) Website Update - The LAFCO website update project has been completed and the $7,000 budgeted for the work this year is not needed for FY The bulk of funds in the expenditure budget are found in salaries/benefits; thus staffing, and not the entire expenditure budget, is considered as a variable. Pursuant to the Cortese-Knox-Hertzberg Act, the Commission is legally responsible for a wide range of tasks. LAFCO staff assures that these responsibilities are met; more specifically they include: Updating agency spheres of influence not less than once every five years Conducting municipal service reviews in preparation for updates of agency spheres of influence Processing applications, with the intention of preparing materials and recommendations for the Commission for changes of organization and reorganization, including conducting hearings and providing notice, as necessary Processing applications for extensions of service beyond an agency s boundaries Preparing and/or updating written policies and procedures for the Commission s operations as well as developing and maintaining standards for the evaluation of proposals for the Commission s operation Item 4 Page 5 of 14 March 12, 2012

8 Preparing and monitoring the annual budget and establishing a fee schedule to recover costs Preparing policies that support preservation of open space and agricultural lands Implementing requirements of state law, including new legislation and, as necessary, working with other agencies/departments at the state and local level to comply Maintaining a website that is available to the public As the Committee is aware, current Commission staffing is 2.55 Full-Time Equivalent (FTE) positions: 1.0 FTE Executive Officer,.80 FTE Assistant Executive Officer, and.75 FTE Commission Clerk. With 2,080 hours allocated for full-time work in a given year, this staffing level approximates 5,300 hours. Information from the Auditor s Office, included in the Management Study completed in 2009, provides a breakdown of hours reduced from the total number available due to a variety of factors, considered to be industry standard. These include vacation, holidays, sick leave, seminars and conferences, training classes, Commission/staff meetings, and break time; they total 619 hours for a full-time position and a pro-rated number for the other positions. The table below translates the 2.55 FTE into hours of work available, from the overall number, including the reductions, and ending with the productive time available. Staff Hours and Adjustments (in hours) Department Total Executive Officer Assistant Executive Officer Commission Clerk Full Time Equivalents Regular Hours per Day Gross Annual Hours Available 5,304 2,080 1,664 1,560 Total Annual Reduction 1, Total Productive Available Hours 3,725 1,461 1,169 1,095 In implementing the mandates of CKH and within the hours available, Sonoma LAFCO staff assists and educates the public, especially potential applicants, about LAFCO and the LAFCO process providing both general information and guidance on questions specific each situation; reviews and processes proposals for changes of organization and reorganization and applications for Outside Service Area Authorizations for the Commission s determination; keeps the Commission informed on activities associated with these responsibilities; and maintains regular communications with cities, special districts, county agencies and departments and with other LAFCOs. In addition, staff actively participates at the state level in consideration of legislative proposals and works to influence proposals that may impact local policies or actions. Item 4 Page 6 of 14 March 12, 2012

9 Beyond this, each year staff implements a program of work, as approved by the Commission. At the Committee s January meeting, staff summarized accomplishments, to date, regarding the current-year work program. For , should staffing be maintained at the current level, the following is proposed: 1. Complete updating of and/or develop Commission policies including review and acceptance by the Policy Committee and, ultimately, the Commission These policies may include, but are not limited to, agency consolidation, agricultural lands, campaign contributions and disclosures, reconsideration of Commission actions, latent powers of districts, economic feasibility of district formation, and travel expenses. Additionally, staff will be revising and/or creating forms and user guides to LAFCO processes, including those associated with applications, plans for services, annexations, detachments and the formation of special districts. 2. Finalize confirmation of spheres of influence of water districts and sanitation districts/zones and collect information about mutual water companies in compliance with new state law Eleven water districts and eight sanitation districts/zones operate within the County. Staff believes that sphere confirmations will be consistent with past reviews, in that few, if any, changes are expected. Staff will contact all the districts initially and confer as needed. Confirmation of spheres requires noticed public hearings. Staff had anticipated that the initial Municipal Service Reviews completed for these agencies in 2004 would be updated unless circumstances warranted additional review. However, with the approval at the state level in 2011 of AB 54 (Solorio), staff must work with mutual water companies operating in the County to obtain information that can be included in MSR. This will likely require development of a questionnaire and possibly meeting with representatives of mutual water companies to explain the legislation and LAFCO responsibilities. In addition, each mutual water company must submit to LAFCO, no later than December 31, 2012, a map depicting the company s service area boundaries. Information from the local office of the State Department of Public Health indicates that 60 mutual water companies operate in Sonoma County. 3. Complete groundwork on Municipal Service Reviews for fire services provided in the County Collectively, agencies providing fire services - city fire departments, special districts and the County - integrate and share many functions and seek ways to be innovative. To that end, staff intends to propose six or seven regional reviews of fire services. The approach will be different from the first-round Municipal Service Item 4 Page 7 of 14 March 12, 2012

10 Review for fire services (in 2005) when a single review was completed for all agencies providing such services. Staff anticipates proposing establishment of a steering committee composed of Commissioners and representatives of fire districts. The steering committee would designate regions for study after discussions and agreement by fire chiefs/district boards of directors. The Municipal Service Reviews would include an in-depth review of functions of each district and its relationship to the region as well as development of area-specific recommendations. 4. Potential Additional Municipal Service Reviews Staff believes that preparation of Municipal Service Reviews would be appropriate to study a number of districts. Upon Commission direction, staff would initiate these studies. For example, the North Bay Water District has no facilities and provides no services at this time. Should this district continue to exist? Other districts, such as the three that promote resource conservation efforts, might also be subject of an MSR, in that they provide services that could more efficiently be provided in a consolidated effort, especially in this time of focus on shared resources. Finally, the Commission may direct staff to conduct a Service Review of an agency due to issues that arise during the year. An example of this is the recent request from residents of the Palm Drive Health Care District who wish to detach their properties from the District. Finally, while staff expects MSRs for the cities of Cloverdale and Santa Rosa to be substantially completed by the end of , final action might extend into next fiscal year. Staff s proposed goals for can be found in Attachment 2. Note about the LAFCO Budget In General State law directs that each LAFCO establish its own independent budget which it must transmit to the County, cities, and special districts. The law also states that at a minimum, the proposed and final budget shall be equal to the budget adopted for the previous fiscal year unless the commission finds that reduced staffing or program costs will nevertheless allow the commission to fulfill (its) purposes and programs. Alternative Budget Proposals for In line with the discussion on variables above, staff proposes three budgetary options for the Committee s consideration. 1. Apportionment Change: Increase agency apportionments; maintain staffing at existing levels; and maintain fund balance at approximately $40,000, in accordance with the Budget Committee s earlier direction Item 4 Page 8 of 14 March 12, 2012

11 2. Fund Balance Change: Establish the Commission s fund balance at below the level of the Budget Committee s earlier direction; maintain apportionments at existing levels; and maintain staffing at existing levels 3. Staffing Level Change: Reduce staffing levels from 2.55 FTE to 2.45 FTE; maintain agency apportionments at existing levels; and maintain fund balance at approximately $40,000 in accordance with Committee s earlier direction. Summary financial data is provided, below, for each of the options to be considered. For complete display of this data, by proposed option and by specific sub-object, please refer to Attachment 3. Budget Option #1 Apportionment Change This option would increase agency apportionments; maintain staffing at existing levels; and maintain the Commission s fund balance at approximately $40,000, in accordance with the Budget Committee s earlier direction. Expenditures and revenues are proposed as follows: Adopted Budget Proposed Budget- #1 % Change Expenditures Total Salary-Benefits $408,045 $428, % Total Services-Supplies $ 79,970 $ 52,095 (34.9%) Total Expenditures $488,015 $480,405 (1.6%) Revenues Total Apportionments $402,686 $417, % Other Non-Fee Revenue $ 6,740 $ 3,000 (55.5%) Total Revenues $409,426 $420, % Need to Balance Budget $ 78,589 $ 60,225 (23.4%) Available Fund Balance $139,373 $100,329 (28.0%) Remaining Fund Balance $ 60,784 $ 40,104 (34.0%) Overall, under this option, the expenditure budget would decrease by 1.6 percent. This represents a reduction in services and supplies reflecting decreases which were noted above for support services, auditor services, and completion of the website update project. In addition, funding allocated for legal services is reduced based on recent experience, small reductions are proposed for postage, printing and data processing Item 4 Page 9 of 14 March 12, 2012

12 services and some increases are proposed for memberships and training/conferences. Staff has no control over some costs which may increase in FY Commission staffing would be maintained at 2.55 FTE, which would allow staff to provide services and complete the proposed work program as outlined above. The projected five percent increase in salaries/benefits largely reflects increased retirement costs, based on information from the County budget system, and the end of the Mandatory Time Off program. No salary increases are included. It should be noted that, at this time, the proposed budget does not reflect any salary/benefit reductions that the County might impose for Fiscal Year Agency apportionments, in this option, would increase by approximately 3.6 percent. For the County, which contributes the largest amount, this would mean about $5,800 above the current-year s $161,074. For the cities as a whole, an additional $5,800 would be assessed and for districts, in total, it would mean an additional $2,900. The increase would allow a portion of the year-end fund balance to be applied to the deficit between projected expenditures and revenues while still retaining approximately $40,000 as available fund balance, in accordance with previous Committee direction, and the minimum staff believes should be maintained. Alternative percentage increases in apportionments, of, for example, four and five percent, would add between $6,450 - $8,050 for the County and for cities as a whole and between $3,220 - $4,000 for districts as a whole. Budget Option #2: Fund Balance Change This option would maintain Commission staffing at the current level of 2.55 FTE and maintain overall agency apportionments at the current level as well but would reduce the available fund balance to below the amount directed by the Committee previously. Expenditures and revenues are proposed as follows: Adopted Budget Proposed Budget- #1 % Change Expenditures Total Salary-Benefits $408,045 $428, % Total Services-Supplies $ 79,970 $ 52,095 (34.9%) Total Expenditures $488,015 $480,405 (1.6%) Revenues Total Apportionments $402,686 $402, % Other Non-Fee Revenue $ 6,740 $ 3,000 (55.5%) Total Revenues $409,426 $405,686 (0.9%) Need to Balance Budget $ 78,589 $ 74,719 (4.9%) Item 4 Page 10 of 14 March 12, 2012

13 Proposed Adopted Budget Budget- #1 % Change Available Fund Balance $139,373 $100,329 (28.0%) Remaining Fund Balance $ 60,784 $ 25,610 (57.9%) Similar to what was described in Budget Option #1, the expenditure budget would decrease by 1.6 percent, with a reduction in Services and Supplies and a five percent increase in salaries and benefits. Commission staffing would be maintained at 2.55 FTE, which would allow staff to provide services and complete the proposed work program as outlined above. As indicated above, the additional five percent in salaries/benefits largely reflects increased retirement costs and the end of the Mandatory Time Off program. No salary increases are included, and, as already noted, the proposal does not reflect possible salary/benefit reductions by the County. Agency apportionments, in this option, would remain the same as existing levels. As was noted earlier, individual agency apportionments could, and likely would, fluctuate from their current-year level. In order to maintain both staffing and agency apportionments at current levels, the fund balance would be substantially depleted. This scenario assumes that year-end expenditures and revenues, as currently projected, will hold. If expenditures are greater than expected and/or revenues are less than anticipated, in this scenario, the fund balance would be further reduced. Staff believes that the fund balance should not be allowed to go as low as is projected in this option, in that this provides very little flexibility for the Commission should an unexpected event or need occur. Budget Option #3: Staffing Level Change This option would maintain agency apportionments at the current level and place the fund balance at a little more than $40,000 in line with the Committee s previous direction. It would require a reduction in salaries/benefits for staff. Expenditures and revenues are proposed as follows: Adopted Budget Proposed Budget- #1 % Change Expenditures Total Salary-Benefits $408,045 $410, % Total Services-Supplies $ 79,970 $ 52,095 (34.9%) Total Expenditures $488,015 $462,980 (5.1%) Revenues Item 4 Page 11 of 14 March 12, 2012

14 Adopted Budget Proposed Budget- #1 % Change Total Apportionments $402,686 $402, % Other Non-Fee Revenue $ 6,740 $ 3,000 (55.5%) Total Revenues $409,426 $405,686 (0.9%) Need to Balance Budget $ 78,589 $ 57,294 (27.1%) Available Fund Balance $139,373 $100,329 (28.0%) Remaining Fund Balance $ 60,784 $ 43,035 (29.2%) Overall agency apportionments would remain the same as existing levels. As was noted earlier, individual agency apportionments could, and likely would, fluctuate from their current-year level. A reduction in the expenditure budget would allow just over $57,000 of the year-end fund balance to be applied to the deficit between projected expenditures and revenues. Approximately $43,000 would still be available in the fund balance, in accordance with previous Committee direction, and the minimum staff believes should be maintained. As Committee members are aware, LAFCO staff are County employees working under a Memorandum of Understanding between the Commission and the County. Salaries and benefits are structured in accordance with the County s job classification system and benefit program, and the amounts proposed are based on current information from the County budget system; as was noted above, these numbers may change during the County s budget process. The current staffing level of 2.55 positions has been in place since Since two of the three positions are less than full-time -.80 FTE Assistant Executive Officer and.75 FTE Commission Clerk/Administrative Aide - staff proposes a reduction in salaries/benefits in the 1.0 FTE Executive Officer position. A decrease in the Executive Officer s time from 1.0 FTE (2080 hours) to.90 FTE (1,872 hours) is proposed in this scenario. Thus, the proposed expenditure for salaries and benefits, instead of increasing by five percent as in Budget Options #1 and #2, would increase by just.7 percent, reflecting an increase in the percentage of salary allocated for retirement costs next year. In terms of hours of work, including reductions based on industry standards, the productive time available would go from 1,461 hours annually to 1,315 hours. Translated into workload impact, this would roughly equate to reduction in professional staff time equal to the application processing of two annexation proposals, three Outside Service Area Authorizations, review of one EIR and review of miscellaneous Initial Studies. Translated into municipal service reviews/sphere of influence amendments or updates, it would equate to extension by half of the time needed to Item 4 Page 12 of 14 March 12, 2012

15 complete one Municipal Service Review or revision or update of an existing sphere of influence. Applications to Sonoma LAFCO for changes of organization/reorganization as well as other types of applications have decreased over the last five years, a drop in activity that has resulted from challenging economic conditions. For example, proposals for annexations to and/or OSAAs for, the City of Santa Rosa, which had represented the bulk of applications, were reduced substantially because the City had a virtual moratorium during its declared fiscal emergency. However, at the same time, the types of applications that have been received have been sufficiently complex, with staff available to work on them, that revenue received has contributed substantially to the Commission s fund balance. Since LAFCO is a reactive agency generally responding to, not initiating, applications, staff cannot predict how many or what types of applications will be forthcoming in the next year. At this time, however, staff is aware of two applications for annexation to the City of Santa Rosa that are being prepared for submittal to the Commission, at least two others for annexation to sanitation districts/zones, and several possible OSAA applications. Attachment 4 provides information about applications over the last five years. The 2009 Management Study concluded that, following the development and/or update of its policies and procedures, Sonoma LAFCO could reduce staffing to the equivalent of one professional position and one support position. This would allow timely responses to inquiries and processing of applications. Any special studies or Municipal Service Reviews above the standard workload, however, would need to be performed by contract or, if conducted by staff, the timeframe for completion would need to be extended. The Commission has chosen to prepare all MSRs in the second round and other studies in-house. Staff proposed and supported this policy to bridge closer ties with individual districts and cities. Such studies account for the extra.55 FTE in the Commission s budget. Staff believes that sufficient work is projected for to allow for continuation of the current level of position authorization. However, should the Committee find it acceptable to extend the amount of time required to provide services or to complete studies and, possibly, to contract out more substantial studies, it may wish to recommend a reduction in the Executive Officer s time. As was noted in the staff report for the January meeting, should that occur, the Executive Officer would request consideration of an amendment to, and extension of, his contract to allow for sufficient hours to complete current projects and for the EO to become vested in the County retirement system. Revenue Enhancements At its January meeting, the Committee asked about means of enhancing fee revenues. Staff noted that the Fee Study completed in 2009 established fees for various types of Item 4 Page 13 of 14 March 12, 2012

16 applications, based on the steps required and time need to process them and the associated staff time cost. Staff proposes fee updates as justified, with the most recent approved as part of the Commission s Budget. Staff will review established fees and may propose changes to the Commission for its April budget hearing. At this time, staff is considering a proposal to add a fee for consultation, with a potential applicant, after a given number of hours had already been provided. Summary As indicated at the beginning of this report, staff requests direction from the Committee regarding the proposed budget which the Commission must consider and approve after a public hearing at its April 4, 2012, meeting. The options provided to the Committee reflect variations in apportionments, fund balance, and staffing: 1. Apportionment Change: Increase agency apportionments; maintain staffing at existing levels; and maintain fund balance at approximately $40,000, in accordance with the Budget Committee s earlier direction 2. Fund Balance Change: Establish the Commission s fund balance at below the level of the Budget Committee s earlier direction; maintain apportionments at existing levels; and maintain staffing at existing levels 3. Staffing Change: Reduce the level staffing to 2.45 FTE; maintain agency apportionments at existing levels; and maintain fund balance at approximately $43,000 in accordance with Committee s earlier direction. RECOMMENDATION Staff recommends that the Committee discuss the three alternative budgets proposed for Fiscal Year and provide policy direction to staff regarding preparation of the budget to be presented to the Commission at its April 4, 2012 meeting. ATTACHMENTS Year-End Expenditure, Revenue, Fund Balance Projections 2. Proposed Goals Proposed Budget Options 4. History of Applications, Item 4 Page 14 of 14 March 12, 2012

17 Sonoma LAFCO Year-End Expenditure, Revenue and Fund Balance Projections Attachment 1 EXPENDITURES Adopted Projected Year End Salaries and Benefits Permanent Positions $ 248,280 Cash Allowance $ 18,370 Bds & Commissions $ 7,240 County Retirement $ 88,250 Unclaimable Retirement $ 4,645 FICA $ 17,925 Health Insurance $ 18,005 Disability $ 2,610 Dental Insurance $ 4,020 Life Insurance $ 615 Vision Insurance $ 620 Unemployment Insurance $ 725 Workers Compensation $ 1,635 Subtotal $ 412,940 $ 397,000 Mandatory Time Off Savings $ (4,895) Total Salaries and Benefits $ 408,045 $ 397,000 Services & Supplies Communications $ 1,250 $ 1,200 Memberships $ 3,350 $ 3,350 Office Expense $ 3,600 $ 4,000 Postage $ 1,000 $ 600 Printing $ 500 $ 250 Professional Services $ - County Services $ 15,770 $ 15,770 Legal Services $ 15,000 $ 8,500 Auditor Services $ 12,500 $ 11,000 Legal Notices $ 3,000 $ 3,000 County Car Expense Travel Expense $ 2,000 $ 2,000 Private Car Expense $ 600 $ 1,000 Unclaimable Car Expense ISD-Data Process. $ 8,500 $ 8,500 ISD Website Project $ 7,000 $ 7,300 ISD Desktop Replacement $ 4,540 $ 4,540 Subtotal $ 78,610 $ 71,010 Other Financing Uses Major Equip. Replace. $ 1,360 $ 1,360 Total Services & Supplies $ 79,970 $ 72,370 Total Expenditures $ 488,015 $ 469,370

18 Sonoma LAFCO Year-End Expenditure, Revenue and Fund Balance Projections REVENUES Adopted Projected Year End Interest on Pooled Cash $ 2,200 $ 3,100 Apportionments County $ 161,074 $ 161,074 Cities $ 161,075 $ 161,075 Special Districts $ 80,537 $ 80,537 ISD - Desktop Replace. $ 4,540 $ 4,540 TOTAL REVENUES $ 409,426 $ 410,326 Use of Fund Balance to Balance Budget $ 78,589 $ 59,044 FUND BALANCE Ending Fund Balance FY $ 139,373 Amount projected to be needed to balance FY adopted budget $ (78,589) Beginning Available Fund Balance FY $ 60,784 Projected FY Processing Fees $ 20,000 Difference between amount projected to be $ 19,545 needed to balance FY budget and currently projected amount Projected Ending Fund Balance FY $ 100,329 Attachment 1 2 March 12, 2012

19 Attachment 2 Sonoma Local Agency Formation Commission Proposed Goals for Fiscal Year Processing Goals Process all administrative Outside Service Area Authorization applications within 30 days of receipt of complete applications Process and complete Commission consideration of all reorganization or change of organization applications within 60 days of the issuance of a Certificate of Filing, unless unique circumstances prevent such action Respond to s within one business day Respond to requests for information within two business days Sphere of Influence Update Goals Complete review and update of spheres of influence for water districts and sanitation districts/zones Fiscal Year Goals Complete Commission approval of all policy and procedures considered and reviewed to date; develop new policies/procedures for Commission consideration and approval as needed Continue update of LAFCO application forms Continue development of user guides, as appropriate Continue to provide on-site training of funding agency staff and, as requested, elected and appointed officials Conduct orientation(s) for new Commissioners, as needed Upon Commission direction, prepare Municipal Service Reviews as appropriate to study services provided by various agencies Projects Planned or In Process Work with fire services sub-committee to complete groundwork for conducting Municipal Service Reviews on fire services in the County and continue to observe and participate in organizational efforts of County Service Area No. 40 (Fire Services), as appropriate Continue to work with and guide Monte Rio Recreation and Park District in its efforts to amend the District s sphere of influence Attachment 2 March 12, 2012

20 Continue to work with Russian River Fire Protection District and Monte Rio Fire Protection District regarding potential consolidation of these districts Continue to work with, and provide support for, efforts of the County and City of Santa Rosa to develop a plan for annexation of unincorporated islands in Southwest Santa Rosa Continue to work with members of the Monte Rio community regarding formation of an agency to process effluent Continue to work with CALAFCO to streamline the sphere of influence/municipal service review process and timelines Attachment 2 March 12, 2012

21 SONOMA LAFCO PROPOSED BUDGET OPTIONS FOR BUDGET COMMITTEE, Attachment Adopted Proposed Budget Options Option #1 Option #2 Option #3 Staffing (Full Time Equivalent) Funding Agency Apportionments Increased 3.5% at Level at Level Fund Balance Minimum Amount $40,000 No Minimum $40,000 Total Salaries and Benefits $ 408,045 $ 428,310 $ 428,310 $ 410,885 Total Services & Supplies $ 79,970 $ 52,095 $ 52,095 $ 52,095 TOTAL EXPENDITURES $ 488,015 $ 480,405 $ 480,405 $ 462,980 Apportionments $ 402,686 $ 417,180 $ 402,686 $ 402,686 Other Non-Fee Revenues $ 6,740 $ 3,000 $ 3,000 $ 3,000 TOTAL REVENUES $ 409,426 $ 420,180 $ 405,686 $ 405,686 To Balance Expend & Revenues $ 78,589 $ 60,225 $ 74,719 $ 57,294 Available Fund Balance $ 60,784 $ 40,104 $ 25,610 $ 43,035 Attachment 3 March 12, 2012

22 SONOMA LAFCO PROPOSED BUDGET OPTIONS FOR BUDGET COMMITTEE, Attachment Adopted Proposed Options Option #1 Option #2 Option #3 Staffing (Full Time Equivalent) Funding Agency Apportionments Increased 3.5% at Level at Level Fund Balance Minimum Amount $40,000 No Minimum $40,000 Salaries and Benefits Permanent Positions $ 248,280 $ 252,945 $ 252,945 $ 241,450 Cash Allowance $ 18,370 $ 18,300 $ 18,300 $ 17,580 Bds & Commissions $ 7,240 $ 7,240 $ 7,240 $ 7,240 County Retirement $ 88,250 $ 102,850 $ 102,850 $ 98,225 Other Benefit Costs $ 50,800 $ 46,975 $ 46,975 $ 46,390 County Imposed Cost Savings $ (4,895) $ - $ - TOTAL SALARIES/BENEFITS $ 408,045 $ 428,310 $ 428,310 $ 410,885 Services & Supplies Communications $ 1,250 $ 1,250 $ 1,250 $ 1,250 Memberships $ 3,350 $ 3,435 $ 3,435 $ 3,435 Office Expense $ 3,600 $ 3,600 $ 3,600 $ 3,600 Postage $ 1,000 $ 800 $ 800 $ 800 Printing $ 500 $ 250 $ 250 $ 250 Professional Services $ - $ - $ - $ - County Services $ 15,770 $ 10,900 $ 10,900 $ 10,900 Legal Services $ 15,000 $ 11,000 $ 11,000 $ 11,000 Auditor Services $ 12,500 $ 3,500 $ 3,500 $ 3,500 Legal Notices $ 3,000 $ 3,000 $ 3,000 $ 3,000 Travel Expense $ 2,000 $ 5,000 $ 5,000 $ 5,000 Private Car Expense $ 600 $ 1,000 $ 1,000 $ 1,000 ISD-Data Process. $ 8,500 $ 7,000 $ 7,000 $ 7,000 ISD Website Project $ 7,000 $ - $ - $ - ISD Desktop Replacement $ 4,540 $ - $ - $ - Desk Top Replacement $ 1,360 $ 1,360 $ 1,360 $ 1,360 TOTAL SERVICES/SUPPLIES $ 79,970 $ 52,095 $ 52,095 $ 52,095 TOTAL EXPENDITURES $ 488,015 $ 480,405 $ 480,405 $ 462,980 Revenue Interest on Invested Cash $ 2,200 $ 3,000 $ 3,000 $ 3,000 Apportionments Total $ 402,686 $ 417,180 $ 402,686 $ 402,686 County (included in total above) $ 161,074 $ 166,872 $ 161,074 $ 161,074 Cities (included in total above) $ 161,075 $ 166,872 $ 161,075 $ 161,075 Districts (included in total above) $ 80,537 $ 83,436 $ 80,537 $ 80,537 ISD - Desktop Replacement $ 4,540 $ - $ - $ - TOTAL REVENUES $ 409,426 $ 420,180 $ 405,686 $ 405,686 Use of Fund Balance $ 78,589 $ 40,104 $ 25,610 $ 43,035 Attachment 3 March 12, 2012

23 Attachment 4 Sonoma LAFCO Application History Application Type Average (mean) Sphere of Influence Amendment Annexation (to District) City Reorganization (Involving Annexation and Detachment) Outside Service Area Agreement (City or District) District Formation Detachment from District Dissolution of District City Incorporation Consolidation/Merger Involving Districts/Cities Establishment of Subsidiary District City Disincorporation Other Types of Application * 0 Total Application Types Commission-Initiated Sphere of Influence Update ** 4 Municipal Service Review *** 0 Notes: * Applications from SMART and Monte Rio Recreation and Park District efforts are incomplete. ** Represents confirmation/update of 14 district spheres of influence and three city spheres of influence *** MSR for City of Petaluma Attachment 4 1 March 12, 2012