Joint School Board & City Council Directive Conversation Agenda - - PDF document

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Joint School Board & City Council Directive Conversation Agenda - - PDF document

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2/4/2019 Joint School Board & City Council Directive Conversation Agenda Municipal FY 2019 Budget Update Through January School FY2019 Budget Update Through December School FY2020 Preliminary Budget Presentation Municipal

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2/4/2019 1

Joint School Board & City Council Directive Conversation

Agenda

  • Municipal FY 2019 Budget Update Through January
  • School FY2019 Budget Update Through December
  • School FY2020 Preliminary Budget Presentation
  • Municipal FY2020 Directive Presentation
  • Valuation FY2020 Discussion
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SLIDE 2

2/4/2019 2

Municipal Budget Update

Through January 30, 2018

General Fund Budget Update

Net Operating Income (Use of Fund Balance) (1,696,547) plus Use of Designated Fund Balance 16,407 less Increase in Designated Fund Balance (32,437) Net Change in Undesignated Fund balance (1,712,577) plus Undesignated Fund balance beginning of Year 6,289,422 11.27% of Adopted budget Undesignated Fund Balance Curr 4,576,845 8.20% of Adopted budget** Target through January 58.3% Expense Total 55.0% Revenue Total 53.5%

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SLIDE 3

2/4/2019 3

Expense Update By Department

Type Department FY2018 Actual FY2019 Adopted FY2019 Budget FY2019 Actual FY2019 Encumb FY2019 Total % of Budget Spent Expense Assessor 194,032 212,888 214,525 85,561 85,561 39.9% Building Maintenance 106,555 133,582 134,062 66,359 66,359 49.5% Capital Projects 3,316,646 2,804,971 4,757,925 1,625,222 800 1,626,022 34.2% City Administration 288,501 365,096 392,965 217,206 217,206 55.3% City Clerk 301,768 316,609 340,428 203,398 4,547 207,945 61.1% Code Enforcement 333,617 307,465 310,852 158,381 122 158,504 51.0% Contingency 301,728 165,482 832,987 706,415 706,415 84.8% Council 15,361 16,627 16,977 12,536 12,536 73.8% County Tax 1,293,389 1,206,722 1,206,722 1,197,241 1,197,241 99.2% Federal Assistance Finance 478,468 468,562 472,346 251,555 251,555 53.3% Fire/Ambulance 3,099,819 3,228,186 3,310,713 1,872,150 18,814 1,890,964 57.1% Fringe Benefits 3,722,906 4,366,537 4,324,628 1,835,314 1,835,314 42.4% Human Resources 140,069 180,125 202,733 101,862 20,000 121,862 60.1% Information Technology 430,522 543,871 668,200 393,854 115,998 509,852 76.3% Insurance 226,506 203,750 203,750 10,334 10,334 5.1% Overlay Parks & Recreation 1,616,770 1,705,835 1,743,143 1,129,246 1,129,246 64.8% Planning & Econ Dev 391,278 477,067 483,933 197,748 2,045 199,793 41.3% Police Department 3,791,620 3,930,056 3,970,250 2,221,683 7,139 2,228,822 56.1% Public Works 5,425,046 5,458,871 5,668,365 2,908,401 363,461 3,271,862 57.7% School Budget 23,706,762 27,267,360 27,267,360 15,905,960 15,905,960 58.3% Solicitor 165,871 141,670 145,966 100,381 100,381 68.8% Supported Entities 838,334 966,269 976,469 699,270 5,200 704,470 72.1% Transfers 2,516,859 1,323,765 1,348,765 25,000 25,000 1.9% Expense Total 52,702,426 55,791,367 58,994,065 31,925,077 538,126 32,463,203 55.0%

Revenue Update

Type Department FY2018 Actual FY2019 Adopted FY2019 Budget FY2019 Actual FY2019 Encumb FY2019 Total % of Budget Spent Revenue Assessor 3,292 (0) (0) 19,526 (0) 19,526 Budgeted Use Of Surplus (0) 190,130 617,487 (0) (0) (0) 0.0% Building Rentals 67,066 55,990 55,990 24,775 (0) 24,775 44.2% Cable Television Franchise 358,422 274,860 274,860 74,462 (0) 74,462 27.1% City Clerk 112,507 131,664 131,664 59,021 (0) 59,021 44.8% Code Enforcement 628,619 434,126 434,126 363,504 (0) 363,504 83.7% Federal Assistance (0) (0) (0) (333,429) (0) (333,429) Finance 149,803 139,856 139,856 79,550 (0) 79,550 56.9% Fire/Ambulance (0) (0) (0) (0) (0) (0) Fringe Benefits (30) (0) (0) (0) (0) (0) Interest Earnings 219,137 228,880 228,880 259,828 (0) 259,828 113.5% Parks & Recreation 903,474 920,184 920,184 427,921 (0) 427,921 46.5% Planning & Econ Dev 77,609 75,000 75,000 67,519 (0) 67,519 90.0% Police Department 143,660 146,444 146,444 79,777 (0) 79,777 54.5% Public Works 4,457,901 4,282,797 4,282,797 2,628,518 (0) 2,628,518 61.4% Real And Personal Property 42,052,752 44,601,051 44,601,051 23,628,169 (0) 23,628,169 53.0% Sale Of City Assets 7,818 10,000 341,012 336,026 (0) 336,026 98.5% State Assistance 2,624,895 2,697,082 2,697,082 1,953,050 (0) 1,953,050 72.4% Transfers 1,024,487 1,544,461 1,544,461 546,804 (0) 546,804 35.4% Unallocated 2,660 58,843 58,843 13,506 (0) 13,506 23.0% Revenue Total 52,834,075 55,791,367 56,549,736 30,228,530 30,228,530 53.5%

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SLIDE 4

2/4/2019 4

School Budget Update

December Financial Statement

School Budget Update

Key Notes for Current Budget

 TA current savings due to enrollment and MAT $830k  Contingency currently will remain unused $150K  Additional Subsidy for the 16 addt’l pre-k students $243K

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SLIDE 5

2/4/2019 5

School Budget FY 2020

Preliminary Directive Budget

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2/4/2019 6

Preliminary Revenue Outlook

Mil Rate Change*: +$0.11

*Mil Rate is based on an assumed $35 million increase in valuation

Proposed RADS (REQUESTS ABOVE DIRECTIVE)

RAD TOTALS

  • Furniture at SMS

$80,000

  • 3rd Grade Teacher @ Burns

$70,000

  • STEM Teacher @ BURNS

$70,000

  • Nurse@ District

$70,000

  • Social Worker @ Fairfield and Young

$70,000

  • Math Teacher @ Young (replacing edtech)

$35,000

  • Functional Life Skills Teacher-K-2

$70,000

  • Special Education Social Worker SMS

$70,000

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SLIDE 7

2/4/2019 7

Pre-School 2020 RAD

  • 4 New Full Day Classrooms (64 students)
  • Budget Needs Annually
  • Program Director

$120K

  • 4 Teachers and 4 Edtechs

$420K

  • Secretary Salary & Benefits

$40K

  • Additional Substitute Cost

$10K

  • Supplies and Books

$24K

  • Annual Cost for Lease

$90K

  • Two new Pre-K Buses ($26k) and 2 Drivers

$106K

  • Total Projected RAD

$810K

  • Estimated Subsidy for 64 new students

$520K

Pre-School Program 2020 RAD Cont’

4 New Full Day Classrooms (64 students)

  • One-time Cost and Saving Opportunities
  • Annual RAD Projection

$810K

  • Equipment (Outfit 4 new classrooms)

$50K

  • Building on Young Site one time cost

$110K

  • Removing 2 current modular buildings

$(-28K)

  • Potential State Approved Lease ($8 sq ft) subsidy

$(-40K)

  • Moving Portion of Director Salary from Curriculum

$(-60K)

  • Total Projected RAD Year 1

$842K

  • Add’l Subsidy and Surplus for 2 Half Day Program

$-(766K)

  • Total funding for year 1 from taxpayers

$76k On Year 2 our Pre-K Program will help supplement

  • ur Operating Budget by $84k
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2/4/2019 8

Day Treatment SPED RAD

Day Treatment Cost

  • Estimated Operating Program Cost $2,430,000
  • Cost already represented in proposed budget $-1,710,000
  • RAD’s needed to Fund Proposed Program $720,000

Revenue

  • Estimated Revenue Received for Program $2,086,100
  • Less Seed Cost 38% of Billable hours $-792,718
  • Total Revenue for the District $1,293,382

Program would help bring in additional Revenue $573,382

Municipal Budget FY 2020

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2/4/2019 9

Sustainable Cycle of Municipal Growth

Population Property Values Tax Revenue Best-in-Class City Services Strong Infrastructure, Safe Neighborhoods, Great Schools, etc

Sustainable Cycle of Municipal Growth

Population Property Values Tax Revenue Best-in-Class City Services Strong Infrastructure, Safe Neighborhoods, Great Schools, etc

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2/4/2019 10

Sustainable Cycle of Municipal Growth

Population Property Values Tax Revenue Best-in-Class City Services Strong Infrastructure, Safe Neighborhoods, Great Schools, etc

Sustainable Cycle of Municipal Growth

Population Property Values Tax Revenue Best-in-Class City Services Strong Infrastructure, Safe Neighborhoods, Great Schools, etc

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2/4/2019 11

Sustainable Cycle of Municipal Growth

Population Property Values Tax Revenue Best-in-Class City Services Strong Infrastructure, Safe Neighborhoods, Great Schools, etc

Sustainable Cycle of Municipal Growth

Population Property Values Tax Revenue Best-in-Class City Services Strong Infrastructure, Safe Neighborhoods, Great Schools, etc

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2/4/2019 12

Potential Breakdowns

When the Cycle isn’t Sustainable…

Potential Breakdown

Population Property Values Tax Revenue Best-in-Class City Services Population Growth With No Property Value Increase

Housing Bust

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2/4/2019 13

Potential Breakdown

Population Property Values Tax Revenue Best-in-Class City Services Excessive Cost Increases New Initiatives Unfunded State Mandates

Potential Breakdown

Population Property Values Tax Revenue Best-in-Class City Services Property Value Increase With No Revenue Increase

Tax Cuts State Claw-Backs Flat fees Unsustainable Growth Incentives

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SLIDE 14

2/4/2019 14

Potential Breakdown

Population Property Values Tax Revenue Best-in-Class City Services Property Value Increase With No Revenue Increase

Tax Cuts

A History of Tax Rates

6.00 7.00 8.00 9.00 10.00 11.00 12.00 13.00 2013 2014 2015 2016 2017 2018 2019 School Mil Rate City Mil Rate

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2/4/2019 15

Falling Tax Rates Have Caused a Shortfall

6.00 7.00 8.00 9.00 10.00 11.00 12.00 13.00 2013 2014 2015 2016 2017 2018 2019

$3.2 million What Has $3.2 Million Cost Us?

10,000 12,000 14,000 16,000 18,000 20,000 30.0 35.0 40.0 45.0 50.0 55.0 60.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Police

Population Growth Police 2000 2200 2400 2600 2800 3000 3200 3400 3600 3800 25.0 30.0 35.0 40.0 45.0 50.0 55.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Fire

Service Calls Fire Linear (Service Calls) 10,000 12,000 14,000 16,000 18,000 20,000 20.0 25.0 30.0 35.0 40.0 45.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Public Works

Population Growth Public works

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2/4/2019 16

What Has $3.2 Million Cost Us?

10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 30.0 35.0 40.0 45.0 50.0 55.0 60.0

Police

Population Growth Police 2000 2200 2400 2600 2800 3000 3200 3400 3600 3800 25.0 30.0 35.0 40.0 45.0 50.0 55.0

Fire

Service Calls Fire Linear (Service Calls) 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 20.0 22.0 24.0 26.0 28.0 30.0 32.0 34.0 36.0 38.0 40.0

Public Works

Population Growth Public works

What Has $3.2 Million Cost Us?

General Fund

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2/4/2019 17

What Has $3.2 Million Cost Us?

General Fund

What Has $3.2 Million Cost Us?

0.00M 0.20M 0.40M 0.60M 0.80M 1.00M 1.20M 2019 2020 2021 2022 2023 Millions

Asset Replacement Schedule

Asset Replacement Schedule Sustainable Funding Level

Capital Program

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2/4/2019 18

What Has $3.2 Million Cost Us?

0.00M 0.20M 0.40M 0.60M 0.80M 1.00M 1.20M 2019 2020 2021 2022 2023 Millions

Asset Replacement Schedule

Asset Replacement Schedule Sustainable Funding Level

Capital Program

Council Actions Taken to Address Challenges

  • Approved Union contracts with pay increases designed to

reduce turnover and provide competitive compensation

  • Pending approval of TIF extensions, expansions, and

development program amendments for economic growth

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2/4/2019 19

Additional Staff Recommendations

  • Adjust departmental staffing to meet growing demand
  • Adjust our maintenance budgets to accommodate growing

capital assets

  • Targeted capital acquisitions to meet citizen demands
  • Software acquisitions to improve productivity

FY 2020 Municipal Budget Scenarios

Maintenance

  • f Effort

Critical Needs

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2/4/2019 20

Maintenance of Effort

  • Fully fund approved public

service union contracts & new hires from FY2019

  • Pay for contracted increases in

contracts & utilities

  • Right-size our use of TIF and

Economic Development funds

  • Retain sufficient funding for new

business park

  • $7.44 Mil Rate is still far below

historic highs*

$7.44

6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00 10.50 11.00 2013 2014 2015 2016 2017 2018 2019 2020

*Mil Rate is based on an assumed $35 million increase in valuation

Critical Needs

  • Right-size departmental staffing

to match growing population

  • Right-size support staffing to

match municipal staff growth

  • Right-size maintenance budgets

to match capital asset growth

  • Capital + software additions to

improve productivity

  • $7.99 Mil Rate is still ($0.10)

below historic highs*

$7.99

6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00 10.50 11.00 2013 2014 2015 2016 2017 2018 2019 2020

*Mil Rate is based on an assumed $35 million increase in valuation

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2/4/2019 21

FY 2020 Municipal Budget Scenarios

Maintenance

  • f Effort

Critical Needs

FY 2020 Municipal Budget Scenarios

$0 Mil Rate Increase Maintenance

  • f Effort

Critical Needs

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2/4/2019 22

$0 Mil Rate Increase*

  • Maintain Municipal Mil Rate below

historic norms

  • Reduce departmental budgets by

$350,000

  • Cut the Capital Program $300,000
  • Unsustainable use of special

revenue funds, including TIFs and the Economic Development Fund

  • Insufficient funds for new business

park

*Mil Rate is based on an assumed $35 million increase in valuation

FY 2020 Municipal Budget Scenarios

$0 Mil Rate Increase Maintenance

  • f Effort

Critical Needs

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SLIDE 23

2/4/2019 23

Valuation Growth Discussion

Valuation Growth Drives Sustainable Growth

Population Property Values Tax Revenue Best-in-Class City Services

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2/4/2019 24

Flat Tax Rates In a Strong Economy Fund Necessary Growth in Services

Municipal Costs Property Values = Mil Rate

Higher-Than-Expected Property Values Reduce the Mil Rate

Municipal Costs Property Values = Mil Rate

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SLIDE 25

2/4/2019 25

Lower-Than-Expected Property Values Reduce the Mil Rate

Municipal Costs Property Values = Mil Rate

Valuation Increase Forecasts

Low Moderate Aggressive

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2/4/2019 26

Valuation Forecasts for FY 2020

1.90 1.95 2.00 2.05 2.10 2.15 2.20 2.25 2.30 2.35 2.40 2012 2014 2016 2018 2020 2022 Billions

Low Moderate Aggressive

Valuation Forecasts for FY2020

  • Low – based on existing valuation for building permits
  • Moderate – based on existing valuation for building permits

with allowance for additional growth on existing construction projects

  • Aggressive – based on continued price growth in the market

(4.3% July – November) which could put pressure on the ratio

NOTE: The assessor acts as an independent agent of the state and valuation adjustments or setting of the mil rate are at the assessor’s discretion based on the City Council approved appropriation each fiscal year.

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2/4/2019 27

Risks in Selecting Valuation Forecasts

  • Low Forecast
  • Council may make unnecessary cuts to keep the Mil Rate Flat
  • Council may not approve funding for critical needs because of an

inflated Mil Rate impact

  • Council may take unnecessary political risks to support initiatives that

increase the Mil Rate only to find out later that the Mil Rate stays flat

  • Aggressive Forecast
  • Council may approve programs under the assumption that the Mil Rate

will remain flat that would not otherwise have been approved

  • Council may experience some criticism from the community later from

higher Mil Rates than expected

Low Valuation Forecast

$0 Mil Rate Increase Maintenance

  • f Effort

Critical Needs

+$25 Million

+$0.03 +$0.47 +$1.02

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2/4/2019 28

Moderate Valuation Forecast

$0 Mil Rate Increase Maintenance

  • f Effort

Critical Needs

+$35 Million

$0.00 +$0.44 +$0.99

Aggressive Valuation Forecast

$0 Mil Rate Increase Maintenance

  • f Effort

Critical Needs

+$70 Million

  • $0.11

+$0.33 +$0.87

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2/4/2019 29

Low Valuation Forecast

+$25 Million

+$0.17 School Mil Rate +$0.01 County Mil Rate

Moderate Valuation Forecast

+$0.11 School Mil Rate +$0.01 County Mil Rate

+$35 Million

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2/4/2019 30

Aggressive Valuation Forecast

  • $0.06

School Mil Rate $0.00 County Mil Rate

+$70 Million

Tonight’s Directive Questions

  • 1. What is your directive to the City Administrator for the

municipal budget you would like to see in FY2020?

  • 2. What is the valuation forecast you would like to use in

modeling the Mil Rates for FY2020?

  • 3. What, if any feedback, would you like to provide on the

existing school directive budget and RADs?

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2/4/2019 31

Last Year $0 Mil Rate 16,356,153 7.03 7.00 6.89 Maintenance of Effort 17,383,503 7.47 7.44 7.33 Critical needs 18,672,621 8.02 7.99 7.87 27,992,135 12.03 11.97 11.80 11.86 1,231,453 0.53 0.53 0.52 0.52 2,304,412,724 2,314,412,724 2,349,412,724 Low Moderate Aggressive City School County Tax Mil Rate Model 7.00

Mil Rate Model

Last Year $0 Mil Rate 16,356,153 7.03 7.00 6.89 Maintenance of Effort 17,383,503 7.47 7.44 7.33 Critical needs 18,672,621 8.02 7.99 7.87 27,992,135 12.03 11.97 11.80 11.86 1,231,453 0.53 0.53 0.52 0.52 2,304,412,724 2,314,412,724 2,349,412,724 Low Moderate Aggressive City School County Tax Mil Rate Model 7.00

Mil Rate Model

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2/4/2019 32

Impact to Homeowner’s Monthly Budget

$0 Mil Rate 16,356,153 $0.58 $0.00 $0.00 Maintenance of Effort 17,383,503 $8.92 $8.33 $8.33 Critical needs 18,672,621 $19.42 $18.83 $18.83 27,992,135 $3.15 $2.16 $2.25 1,231,453 $0.17 $0.13 $0.17 2,304,412,724 2,314,412,724 2,349,412,724 Low Moderate Aggressive Impact to Homeowner's Monthly Budget City School County Tax $0 Mil Rate 16,356,153 $0.58 $0.00 $0.00 Maintenance of Effort 17,383,503 $8.92 $8.33 $8.33 Critical needs 18,672,621 $19.42 $18.83 $18.83 27,992,135 $3.15 $2.16 $2.25 1,231,453 $0.17 $0.13 $0.17 2,304,412,724 2,314,412,724 2,349,412,724 Low Moderate Aggressive Impact to Homeowner's Monthly Budget City School County Tax

Impact to Homeowner’s Monthly Budget

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2/4/2019 33

Appendix

Impact to Homeowner Model

$0 Mil Rate 16,356,153 $7 $0 $0 Maintenance of Effort 17,383,503 $107 $100 $100 Critical needs 18,672,621 $233 $226 $226 27,992,135 $38 $26 $27 1,231,453 $2 $2 $2 2,304,412,724 2,314,412,724 2,349,412,724 Low Moderate Aggressive City School County Tax Impact to Homeowner

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2/4/2019 34

Mil Rate Model – Combined*

Last Year $0 Mil Rate 45,579,741 19.58 19.50 19.21 Maintenance of Effort 46,607,091 20.02 19.94 19.64 Critical needs 47,896,209 20.58 20.49 20.18 2,304,412,724 2,314,412,724 2,349,412,724 Low Moderate Aggressive Mil Rate Model 19.38

*The Scenarios represent flexibility on the part of the City Administrator to develop a municipal budget only. The City Administrator does not have jurisdiction over the school budget.