Yolo County LAFCo adopts an annual budget with notice to the four cities and Yolo County. In accordance with the CKH Act, a proposed budget must be adopted by May 1 and final budget by June 15 of each year. Following approval of the final budget and no later than July 1, the auditor requests payment from each agency. In order to meet these time lines, the final budget is scheduled to be adopted at the May 22, 2014 LAFCo Commission meeting and invoices will go out thereafter.
In accordance with the CKH Act, the cities and County split the cost of LAFCo funding 50/50. A formula for the split of the cities’ share is outlined in Government Code Section 56381 (b)(1); which would be in proportion to a city’s tax revenue or an alternative method approved by a majority of the cities. Beginning in FY 2007-08, the cities of Yolo County developed an alternative formula to apportion their 50% of LAFCo funding by averaging a city’s general tax revenue (less grant monies) and population.
A more detailed table detailing the formula is attached for review (this agenda software program does not handle tables well). In summary, the breakdown of agency apportionment of the LAFCo budget is as follows:
City of Davis 17.05%
City of West Sacramento 16.37%
City of Winters 1.61%
City of Woodland 14.96%
County of Yolo 50.00% |
Revenues
The Revenues include anticipated income from other agencies, interest, and fees. The following lists the draft budget cost to each agency and increase amount from the last fiscal year.
City of Davis $76,557 (increase of $14,120)
City of West Sacramento $73,501 (increase of $13,608)
City of Winters $7,230 (increase of $1,326)
City of Woodland $67,181 (increase of $12,405)
County of Yolo $224,469 (increase of $41,469)
The draft budget would result in an 22.6% increase in agency costs, which is explained in detail below. However there is a Fund Balance available of $43,405 which, if applied, would reduce the increase to 10.7%.
Fund Balance
There is currently $183,405 in LAFCo’s fund balance that is not currently appropriated. However, based on our last audit we have an estimated liability of $50,000 for other post-employment benefits (OPEB) for the previous retired Executive Officer. At the February 2014 meeting the Commission approved moving these funds into a restricted cash account. Staff recently finalized an agreement with the County to share in these OPEB costs since the majority of the previous Executive Officer’s employment was with Yolo County, but LAFCo will still need to have the liability recalculated by an actuary, presumably when LAFCo contracts for the next audit in FY 15/16. Per LAFCo’s Administrative Policies and Procedures the Commission should strive to include a contingency budget equal to or greater than 20% of the overall budget. With the OPEB and contingency set aside, $43,405 of the fund balance remains that could be used to offset agency costs.
Staff will have an opportunity to review the proposed budget and the available fund balance with the city and county managers on Friday, March 21, 2014 and staff will provide any updated recommendations if requested.
Expenditures
Salaries and Benefits
Overall, the total salary and benefits is projected to increase 10% from the current year's adjusted budget. This is due to:
- A projected 5% step increase for the Executive Officer
- Hiring a new half time Associate Management Analyst in the fall of 2013 who would also have a projected 5% step increase
- A 2% cost of living adjustment for all three LAFCo employees that was negotiated with the County bargaining unit in which LAFCo staff is included
These salary increases have been assumed to provide a conservative budget estimate for the Commission, however please note that these increases are discretionary.
Services and Supplies
Overall, LAFCo related expenditures in services and supplies are projected to increase by 15% in the next fiscal year. Staff maintained or trimmed the proposed budget in individual accounts as much as reasonable to reflect actual costs to ensure there is no "fluff" in the budget.
The primary reason for a increase in services and supplies is due an increase in professional services. As discussed in last month's work plan, staff anticipates contracting out two relatively significant Municipal Service Reviews (MSRs) next fiscal year, one for all the fire protection districts and the other for the City of Davis including its associated County Service Areas (CSAs). The MSR we contracted for this year was $42,000 so staff assumed 2 x $40,000 = $80,000 for the estimate. With the current workload in shared services, its unrealistic to complete these studies in house in addition to catching up on the MSRs staff is already behind on. LAFCo's commitment to shared services is a worthwhile effort, but it does require staff time and resources. Hopefully, the cities and County will concur that the value obtained is worth the cost.
Conclusion
The proposed budget maintains adequate support for the Commission to meet the responsibilities of the Cortese-Knox-Hertzberg (CKH) Act and the Shared Services Program. Overall, the expenditures have grown as the scale and scope of the shared services program continues to increase. The shared services program is LAFCo value-added but it does come at a cost. Ultimately, the Commission representing the cities and the County need to determine if the value is worth the additional cost. |