Budget Presentation City of Sierra Madre FY 2017-18 Future Budget - - PowerPoint PPT Presentation

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Budget Presentation City of Sierra Madre FY 2017-18 Future Budget - - PowerPoint PPT Presentation

Oct 13, 2023 243 likes •545 views

Budget Presentation City of Sierra Madre FY 2017-18 Future Budget Concerns 1. Budget Process 2. Increased Personnel Costs, Contracts, & Pension 3. Debt Obligations & Loans in Water Enterprise 4. Water Utility Operations 5. 2017/18

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Budget Presentation

City of Sierra Madre FY 2017-18

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Future Budget Concerns

  • 1. Budget Process
  • 2. Increased Personnel Costs, Contracts, & Pension
  • 3. Debt Obligations & Loans in Water Enterprise
  • 4. Water Utility Operations
  • 5. 2017/18 Budget

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Budget Process

Zero-Based Budget

  • Line by line review of all expenditures (actual vs. budget)
  • Focus on priorities & strategies, not history (reinvest savings)
  • One-time vs. on-going expenditures (lotto winnings)
  • On-going revenues pay for on-going costs (Excess Water Penalties)
  • Prioritize 3Ps--Public Safety, Public Work, Parks & Rec (& Library)

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Budget Process

2017-18 Sierra Madre Budget Principles

  • This is a process, not an event (3 years to sustainability)
  • Expenditures reduced to offset planned increases
  • On-going costs must shrink & while one-time costs increase
  • EX) Infrastructure, public safety equipment
  • Reduce government costs without asking for a tax increase from voters

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Future Budget Concerns

  • 1. Budget Process
  • 2. Increased Personnel Costs, Contracts, & Pension
  • 3. Debt Obligations & Loans in Water Enterprise
  • 4. Water Utility Operations
  • 5. 2017/18 Budget

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Increased Personnel Costs-Salaries

Salary Increases for FY2017-18: POA pay increase of 6%

  • $130,000

General Government pay increase of 2.3%

  • $143,600 ($77,400 GF)

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Increased Costs – Budget & Contracts

Wage Increase (Approved in Nov. 2016, not budgeted) Paramedic

  • $64,000

Library Community Services

  • $2,400

Budget FY 2016-17 Budget balanced with Fund Balance (one-time)

  • $54,600

Contracts Change to prevailing wage, grounds maintenance

  • $25,000

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Increased Personnel Costs-Pension

The Unfunded Accrued Liability (UAL) is:

  • actual gains or losses vs. expected experience (reality vs. projections)
  • caused because benefits paid are greater than funds invested

UAL Calculation(s):

  • recalculation (Fall of 2017) will likely lead to greater liability
  • the UAL is designed to eliminate liability overtime (IF assumptions don’t change)

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Increased Personnel Costs-Pension

  • The City’s Total Pension Liability is $10,678,000 (approx 75% funded)
  • The City’s Unfunded Accrued Liability (UAL) will increase by 40% over next 6 years
  • The 2017-18 pension expense is $727,510
  • The 2022-23 pension expense will be $1,030,400
  • UAL Expected Annual Increases:
  • FY 17-18 $102,350
  • FY 18-19 $143,300
  • FY 19-20 $151,138
  • FY 20-21 $96,354
  • The Board calculates numbers again in Fall of 17 and numbers will likely increase

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Increased Personnel Costs-Pension

$727,510 $1,220,651 $1,030,422

$- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23

3rd largest GF Department

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Future Budget Concerns

  • 1. Budget Process
  • 2. Increased Personnel Costs, Contracts, & Pension
  • 3. Debt Obligations & Loans in Water Enterprise
  • 4. Water Utility Operations
  • 5. 2017/18 Budget

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$339,345 $339,345 $339,345 $331,595 $315,720 $1,310,850 $771,680 $138,663

$- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 2017 2018 2019 2020 2021 2022-26 2027-31 2032-34

Sierra Madre Water Revenue Parity Bonds, Series 2003 - Original Issue $6,750,000

Principal Interest

Interest Only Payments from 2003-2019 ($4,628,289 to date) 12

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$310,000 $325,000 $339,345 $339,345 $339,345 $331,595 $315,720 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 2017 2018 2019 2020 2021

Sierra Madre Water Revenue Parity Bonds, Series 2003 - Original Issue $6,750,000

Principal Interest

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$450,000 $470,000 $495,000 $59,500 $36,500 $12,375 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 2017 2018 2019

Sierra Madre Water Revenue Refunding Bonds, Series 1998A-Original Issue $6,740,000

Principal Interest

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$848,845 $845,845 $846,720 $663,190 $631,440 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 2017 2018 2019 2020 2021

Near Term Debt Obligations (Bonds) -Water

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Water Enterprise Debt Obligations, Near-Term (Bonds and Loans)

$- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 2017 2018 2019 2020 2021 Principal Interest Loans

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Water Enterprise

0% 20% 40% 60% 80% 100% Debt 22% Excess Water Charge 16% Operations 62%

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Water Enterprise Health Indicators

Health is determined by debt, revenue stability, & asset condition

  • 1. Debt Service
  • Currently debt equals more than 22% of Water revenues through 2020
  • 2. Revenue Stability
  • 16% of revenue collected is non-repeatable (excess water charge)
  • 3. Future Cost of Infrastructure
  • Hydrology report will show need for critical maintenance & replacement

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Future Budget Concerns

  • 1. Budget Process
  • 2. Increased Personnel Costs, Costs, & Pension
  • 3. Debt Obligations & Loans in Water Enterprise
  • 4. Water Utility Operations
  • 5. 2017/18 Budget

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4,851,466 5,275,770

  • 1,000,000

2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 2015 2016 2017 2018 2019 2020 2021 2022

Total Operating Revenues Total Operating Expenditures

Water Utility Operations

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$19,084 $19,451 $9,175 $118,908 $155,975

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30 80 130 180 230 280 330 380 430 480 $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2012 2013 2014 2015 2016 2017 (Est.)

Cost and Number of Leaks

Cost to Repair Leaks Number of Leaks

Leaks: 256-480

Leak Repair (Cost)

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Cost:$94,000 -$176,000

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Leak Repair (Cost in Time)

468 477 225 2916 3825 4320 2012 2013 2014 2015 2016 2017 (Estimated)

1 FTE 2 FTE

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Leak Repair (Value)

$811,556 $503,037 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 2015 2016

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29% 21%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2015 2016

Percent Water Loss of Total

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Future Budget Concerns

  • 1. Budget Process
  • 2. Increased Personnel Costs, Contracts, & Pension
  • 3. Debt Obligations & Loans in Water Enterprise
  • 4. Water Utility Operations
  • 5. 2017/18 Budget

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2017/18 Budget (General Fund)

Past budgets reduced same year costs, while increasing future year costs

  • EX) Public Safety Equipment (Computers, Radios, Vests)
  • EX) Valve Maintenance Program (Water)
  • EX) Using reserves to balance budget ($54,600)

Costs will continue to increase and likely accelerate

  • Ex) Pension/UAL

General Fund budget must reduce expenditures to stay the same

  • Ex) Employee raises, pension obligations, contract increases

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2017/18 Budget (Water)

Water Enterprise

  • Revenue stability is uncertain based on current rate model (84%/16%)
  • Debt currently comprises 22% of revenue annually through 2020
  • Hydrology report will show infrastructure in need of maintenance/replacement
  • City needs to start making “100 year” decisions
  • Debt Management (Refinance, Water Cash Flow, General Fund Reserves)

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2017/18 Budget

Moving forward, services must align with financial realities

  • Do “more with less” is actually “do less with less”

Council will provide direction for FY2018/19 budget for:

  • Water, Fire, Library, General Government

Budget process will reduce costs, not ask the voters to approve a tax increase

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Thank you

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