SONOMA LOCAL AGENCY FORMATION COMMISSION

Transcription

1 SONOMA LOCAL AGENCY FORMATION COMMISSION 575 ADMINISTRATION DRIVE, ROOM 104A, SANTA ROSA, CA (707) FAX (707) Item 4 Staff Report Meeting Date: March 5, 2014 Agenda No. Item 4 Agenda Item Title: Proposal: Environmental Determination: Staff Contact: Preliminary Review of Fiscal Year Proposed Budget and Future Considerations None Not a project under CEQA Carole Cooper

2 ANALYSIS Background State law requires the Commission to annually conduct two noticed public hearings on its upcoming year s budget. The Commission will consider the Fiscal Year Proposed Budget at a hearing on April 2 while the hearing on the Final Budget is scheduled for the meeting of June 4. Staff typically presents a preliminary draft budget to the Budget Committee in March and uses information from that discussion to guide preparation of the Proposed Budget for the Commission s consideration. In anticipation of changes initiated by the County as well as future projections for LAFCO, staff met with the Budget Committee on February 5 to seek further direction and guidance in preparation of the budget. In staff s report to the Committee, anticipated transitions or new programs, with resulting financial impacts on the Commission s budget, were described. These included: Payment for accrued vacation leave to the Executive Officer upon his retirement Implementation of the County s new financial reporting system Installation of an electronic document management system Upgrade of office copier and/or printer Content management system allowing for consistent branding, improved public experience and use, efficiency gained through self-service, civic participation and agency transparency Staff noted that the combination of: (1) year-end expenditures anticipated at or near the adopted budget level, (2) substantially reduced processing fee revenues to date this year; and (3) the Commission s direction to maintain an available fund balance would likely result in a need to increase agency apportionments for FY This would be true even if no changes to the current level of expenditures were proposed for next fiscal year. After discussion, the Committee directed staff to prepare, for its consideration in March, a draft budget providing various expenditure scenarios and their impacts on agency apportionments. Three scenarios are described below, and spreadsheets with more specific detail are provided as attachments. Salaries and Benefits for All Scenarios Based on the recommendations of both the Budget and Policy Committees, Commission staffing for Fiscal Year is projected to remain at the current-year level: 2.55 Full-Time Equivalent (FTE) positions, with 1.0 FTE Executive Officer position,.80 FTE Assistant Executive Officer position and.75 FTE Commission Clerk BC Agenda Item 4 2 March 5, 2014

3 position (the latter two positions are classified in the County system, as Administrative Analyst III and Administrative Aide, respectively). Salaries and benefits for all of the scenarios described in this report are projected at $451,925, an increase of $27,425, or 6.5% over the current-year total of $424,500. The bulk of this increase covers the cost of a lump-sum payment to the Executive Officer of his accrued vacation leave upon his retirement at year end, as allowed by County policy. At this time, the amount projected - $25,300 is the most that would be paid based on the County s policy of a maximum accrual of 480 hours. Other changes for reflect the following: (1) elimination of deferred compensation payments by the County, which affects not only salaries but also allocations for disability insurance, life insurance, unemployment insurance, and workers compensation; (2) an increase in the percentage of salary allocated for retirement costs; (3) an allocation for health reimbursement account payments for which the Commission Clerk is eligible and which began during the current fiscal year; (4) changes in cost or percentage allocations for workers compensation, life, dental, vision care, and long-term disability insurances; and (5) the addition of the allocation of a share of the County s employee assistance program to departments, which began this year. SCENARIO #1 Expenditures EXPENDITURE AREA BUDGET PROPOSED CHANGE % CHANGE Salaries/Benefits $424,500 $451,925 $ 27, Services/Supplies $ 76,010 $ 69,665 ($ 6,345) (8.3) Total $500,510 $521,590 $21, In this scenario, services and supplies accounts total $69,665 compared to the currentyear $76,010. The changes reflect the following: Increase in Office Expense to reflect the cost of leasing an upgraded copier, due to the age of the current copier; the cost for a desktop color printer, which is increasingly needed for color maps; and an incremental increase in the cost of paper [$3,600 to $5,200]. Decrease in Professional Services to reflect the elimination of funds for Executive Officer recruitment; the remaining amount should cover the cost of a consultant for an annual strategic planning session for the Commission [$8,500 to $1,500]. Increase in the cost of County Services as imposed by the County as LAFCO s share [$8,250 to $11,000] Decrease in Auditor Services to reflect the use of funds for an audit. $9,450 budgeted this year will be encumbered to be used in for this purpose, with the addition of an incremental amount ($1,750) to cover the cost of including BC Agenda Item 4 3 March 5, 2014

4 a third year in the audit, which was accepted by the Commission at its February meeting [from $12,950 to $5,250] Increase in Legal Notices to reflect increased publication costs [from $2,000 to $3,000] Inclusion of a line item to cover LAFCO s share of the cost of the County s new Enterprise Financial System [+$900] Increase in Travel Expense/Private Car Expense line items to accurately reflect the projected cost of Commissioners and staff s attendance at trainings, conferences, and workshops relevant to the Commission s mission [from $9,000 to $10,000] Inclusion of funds to cover the cost charged by the County Information Systems Department for changes to the Commission s website, beyond the 10 hours allocated for this use by the County [+$900] Funding the Scenario #1 Budget Proposal The budget, as proposed in Scenario #1, assumes no use of Fund Balance monies, in that, as indicated above, current-year expenditures are anticipated to be at or near the adopted budget level; revenues from processing fees will be low, limiting the amount to be added to the fund balance, and staff anticipates that the Commission wishes to maintain its fund balance at the current level. Thus, except for a small amount of income from interest on pooled cash, the bulk of operational funds must come from agency apportionments. The table below provides the amounts under this scenario. REVENUE SOURCE PROPOSED CHANGE % CHANGE Interest $ 2,500 $ 2,500 $ 0 - County Apportionment $ 185,204 $ 207,636 $ 22, Cities Apportionments $ 185,204 $ 207,636 $ 22, Districts Apportionments $ 92,602 $ 103,818 $ 11, Total Revenues $ 465,510 $ 521,590 $ 56, Use of Fund Balance $ 35,000 $0 ($ 35,000) (100.0%) Total $ 500,510 $ 521,590 $ 21, Apportionments would need to increase by 12.1%, with the County and the nine cities, as a whole, paying 80% of the total not covered by interest from invested cash. Staff hopes to provide some ballpark estimates of individual agency costs at the Committee s meeting. BC Agenda Item 4 4 March 5, 2014

5 SCENARIO #2 As with Scenario #1, Salaries and Benefits accounts would cover the costs of the current level of staffing, along with funds for payment of vacation leave accrual for the Executive Officer. The Services and Supplies accounts are the same with addition of $60,000 for consultant work. EXPENDITURE AREA BUDGET PROPOSED CHANGE % CHANGE Salaries/Benefits $ 424,500 $451,925 $ 27, Services/Supplies $ 76,010 $ 129,665 53, Total $ 500,510 $581,590 $81, To implement the Commission s determination to be more proactive in its approach to major studies, a consultant/consultants would supplement staff s work in conducting a specialized, in-depth MSR for an agency/agencies or services where technical or outside expertise would be needed. The amount, which is based on the cost of the current-year MSR for fire services in Zone 6 and discussions with various consultants, was recommended by the Personnel Committee at its meeting in December Although the Budget Committee considered an alternative of increasing staff time in lieu of hiring a consultant, staff s comparison of the options indicated that the costs would be similar, and use of a consultant would provide more flexibility to the Commission and to the incoming Executive Officer. Although the focus of a MSR next year has not yet been determined, should the Committee, and subsequently, the Commission, approve this funding, staff believes that a MSR for the City of Santa Rosa should be considered, especially in light of both the City s and County s interest in annexation of the Roseland area and perhaps other island areas scattered throughout the City. At this time, the sphere of influence for the City is not consistent with Commission policy. Funding the Scenario #2 Budget Proposal As with Scenario #1, this option assumes no use of fund balance monies. The impact on agency apportionments is shown in the table below. REVENUE SOURCE PROPOSED CHANGE % CHANGE Interest $ 2,500 $ 2,500 $ 0 - County Apportionment $ 185,204 $ 231,636 $ 46, Cities Apportionments $ 185,204 $ 231,636 $ 46, BC Agenda Item 4 5 March 5, 2014

6 REVENUE SOURCE PROPOSED CHANGE % CHANGE Districts Apportionments $ 92,602 $ 115,818 $ 23, Total Revenues $ 465,510 $ 581,590 $ 116, Use of Fund Balance $ 35,000 $0 ($ 35,000) (100.0%) Total $ 500,510 $ 581,590 $ 81, Overall, apportionments would need to increase 25% over the current fiscal year apportionments. SCENARIO #3 For this option, salaries and benefits remain the same as in the other options. The only change from Scenario #2 is in Service and Supplies where $11,850 is projected as the initial cost to implement an electronic document management system (EDMS). As discussed with the Committee at the February meeting, this project would ultimately convert the Commission s documents from a paper to an electronic mode; state law requires that LAFCO documents must be retained in perpetuity. A single repository for documents would be created compared to the current system which houses documents in the County Records Center, the County Library Archives, the Recorder s Office, the office of the Board of Supervisors, and the LAFCO office. The ability to provide shared access with County departments and other governmental agencies and streamline the flow of information would be a major benefit of the project. Currently, the Commission Clerk spends her time, sometimes up to five-six hours a week researching materials to respond to a request from another government agency or the public or upon direction from the Executive Officer. One recent example is the need to gather information about annexations in Southwest Santa Rosa in the last 20 years, in preparation for inquiries from the City and County regarding impending efforts in that regard. In addition, if there are efforts to further study the provision of fire services in the County, much time will be required to research past history and access documents important to the future of those efforts. The County is implementing EDMS across departments, with costs allocated among them. The longer LAFCO waits to participate, the greater the probability that the major project will be completed and the conversion of LAFCO documents would be seen as an isolated effort, with possibly a higher cost. Beyond this, the longer the delay, the farther behind in converting documents to electronic mode and the higher cost for catchup. As stated in an earlier report to the Committee, implementation of EDMS would result in a more efficient method of accessing and retrieving LAFCO documents as well as a safer, more efficient method of permanent document storage. The expenditure amounts associated with Scenario #3 are reflected in the table below,. BC Agenda Item 4 6 March 5, 2014

7 EXPENDITURE AREA BUDGET PROPOSED CHANGE % CHANGE Salaries/Benefits $424,500 $ 451,925 $ 27, Services/Supplies $ 76,010 $ 141,515 $ 65, Total $500,510 $ 593,440 $ 92, Funding the Scenario #3 Budget Proposal As with Scenarios #1 and #2, this option assumes no use of fund balance monies. The impact on agency apportionments is shown in the table below. Overall, apportionments would need to increase by just less than 28%. REVENUE SOURCE PROPOSED CHANGE % CHANGE Interest $ 2,500 $ 2,500 $ 0 - County Apportionment $ 185,204 $ 236,376 $ 51, Cities Apportionments $ 185,204 $ 236,376 $ 51, Districts Apportionments $ 92,602 $ 118,188 $ 25, Total Revenues $ 465,510 $ 593,440 $ 127, Use of Fund Balance $ 35,000 $0 ($ 35,000) (100.0%) Total $ 500,510 $ 593,440 $ 92, Assumptions Made for Scenarios As indicated earlier in this report, the budget scenarios presented based on certain assumptions, specifically: year-end expenditures will be at or near the appropriations level thus, no funds would go into the fund balance; revenue from processing fees will be at a low level thus, again, few funds would go into the fund balance; and the Commission wishes to maintain the fund balance at its current level. It should be pointed out that any of these factors could change before the end of the fiscal year; if expenditures are less than appropriations, or if processing fee revenue increases, or if the Commission determines to lower the level of its available fund balance, the fund balance would be increased. The Commission could then determine to use some of these funds to help offset a portion of agency apportionments. BC Agenda Item 4 7 March 5, 2014

8 The Future Staff understands that, at this time, the Budget Committee is primarily interested in considering the proposed draft budget for Fiscal Year for recommendation to the Commission and, further, that the Committee is aware that all of the scenarios proposed will require higher, or substantially higher, apportionments for agencies unless circumstances change considerably. Thus, cognizant of the financial impact on funding agencies, the Committee might wish to recommend the least expensive option for the upcoming year. While staff understands such a position, should the Committee make that recommendation, staff believes that it is important to be aware of the larger picture for the future, to implement the Commission s more proactive vision and work, including MSRs, outreach to the community, and use of technological innovations, as examples. To speak to that, staff has developed the table below which identifies areas that, we believe, need to be considered for the future; they include items that staff has recommended in the scenarios presented for as well as other focal points. Costs, to the extent they are known at this time, are included as are staff s assessments of value and import. Future Needs/Projections Cost, If Known Staff s Assessment Electronic Data Management System $11,850 Initial setup cost $2,300 annual maintenance and licensing fees Back file scanning: up to a total of $30,000 that can be spread over several years Allows staff to work more effectively and efficiently by creating a single repository for Commission documents; allows for faster information retrieval; shared access with other governmental agencies and the general public; streamlining of information flow; reduces disaster recovery time and costs; substantially reduces staff research and response time to inquiries. Delay could increase costs if County project is more advanced and also require additional time and effort to convert more years of documents. Content Management System Unknown at this time Would allow LAFCO staff direct access to Commission s website, reducing time needed to update website and cost charged by ISD. With upcoming projects, such as possible Roseland area annexation and provision of fire services, there will likely be more content to post on the website; facilitating that will be important to the Commission s work in the future and access to public/other departments. Consultant Work $50,000- $60,000 annually Depending on Commission s directed action and future staffing configuration, use of consultants may be necessary to conduct in-depth complex, technical BC Agenda Item 4 8 March 5, 2014

9 Future Needs/Projections Cost, If Known Staff s Assessment MSRs for agencies or services. Enterprise Financial System (EFS) Salaries/Benefits for staff $900 for ; unknown for the future Unknown at this time The cost of EFS, which is being implemented as of July 1, 2014, is allocated among departments and agencies that use the County s financial system. As projected at this time, the agencies include many independent special districts. However, due to what are viewed as extremely high costs assessed, many, especially fire districts, are considering withdrawal. Should that occur, costs for remaining participants would increase. LAFCO s allocated cost for Phase I of implementation in is just less than $900. The Commission should anticipate at least that level, or a higher cost, annually over upcoming years. The incoming Executive Officer will study the Commission s staffing configuration and may recommend changes that will impact the budget. In addition, the base salary for the Executive Officer position was last surveyed in 2007 and, should a salary comparison with other LAFCOs be undertaken, it may result in a salary upgrade. Also, the % of salary directed toward various benefits is subject to determination by the County, not in LAFCO s control, and may result in cost increases. Miscellaneous Services & Supplies Unknown at this time The Commission receives and, through its budget, pays for various services from the County. For these are stabilized at the current-year levels. However, they are anticipated to increase beginning in Included are: communications costs as well as charges from the Information Systems Department for the Commission s website, access to the network for , GIS services, and other data processing needs. In addition, LAFCO share of the cost of other services that the County provides will likely increase due to large-scale efforts that the County is undertaking; upgrade of the communications system and computer infrastructure, which were initiated during the current fiscal year, are two examples. Bi-Annual Audit $5,500 annually Assuming that each audit will continue to cover a two-year period, staff anticipates including funds each year, instead of every other year, as has been practiced heretofore, to avoid peaks and valleys for this account. Legal Services Unknown at this time Hourly costs for legal counsel will likely increase annually. The incoming Executive Officer may wish to use counsel s services more than is currently the case. In addition, if a conflict of interest exists for BC Agenda Item 4 9 March 5, 2014

10 Future Needs/Projections Cost, If Known Staff s Assessment LAFCO counsel, who is currently assigned from County Counsel s Office, on issues that may come before the Commission, outside counsel may be recommended; this would likely be at a higher cost. New printer $ The current printer is over 15 years old and will likely need to be replaced within the next 1-2 years. Staff will evaluate the cost/benefits of a single, large volume printer or individual desktop models. Additional Computer $1000 As a phase of implementation of an electronic document management system, installation of a computer for public use in the LAFCO office will allow access to those who wish to have LAFCO information. This will reduce the amount of time required for staff to respond the numerous requests for such information. RECOMMENDATION Staff requests that the Committee review and discuss the preliminary budget scenarios and provide a recommendation to the Commission s for its consideration of the Proposed Budget at the April 4 hearing. ALTERNATIVE TO RECOMMENDATION The Committee could request additional information to be included in the Proposed Budget presented to the Commission in April. ATTACHMENTS 1. Preliminary FY Budget Options BC Agenda Item 4 10 March 5, 2014