Print Reading Mode Back to Calendar Return
  Public Hearings   8.       
LAFCO
Meeting Date: 04/25/2024  

Information
SUBJECT
Consider and adopt the proposed LAFCo Budget for fiscal year (FY) 2024/25 and set May 23, 2024, as the public hearing date to approve the final budget
RECOMMENDED ACTION
1. Receive staff presentation and open a public hearing to accept public comments on the Draft LAFCo Budget for FY 2024/25;
2. Close the public hearing, provide staff direction as desired, and set May 23, 2024, as the public hearing to consider approval of the Final Budget.
FISCAL IMPACT
The attached Draft LAFCo budget (Attachment A) proposes an increase from roughly $550,000 to $675,000, a 23% increase overall, in order to address succession planning and increasing LAFCo staff/benefits from 2.0 FTE (full time equivalent) to 2.25 FTE. 
REASONS FOR RECOMMENDED ACTION
In accordance with the Cortese-Knox-Hertzberg 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 County Auditor requests payment from each agency. In order to meet these timelines, the final budget is scheduled to be adopted at the May 23, 2024, LAFCo Commission meeting.

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), 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 developed an alternative formula to apportion their half of LAFCo funding by averaging a city’s general tax revenue and population.
BACKGROUND
At the February retreat, succession planning was identified as a Commission priority along with other additional priorities identified in the Summary Report. There was a discussion about the need to align LAFCo resources with these additional priorities in the Strategic Work Plan. The Commission acknowledged that for LAFCo to fully achieve the additional priorities, more resources would be required.

The succession plan as LAFCo's Commission Clerk retires is to replace the position with a higher level analyst and add a 1/4-time clerk (increasing LAFCo's staffing levels from 2.0 to 2.25 full-time equivalent (FTE) overall). Staff presented some rough conservative cost estimates at the March meeting to frame the decision-making process. The Commission then appointed an ad hoc subcommittee comprised of Commissioners Biasi and Villegas to work with staff on the draft budget recommendation. The subcommittee met twice in early April, worked on the numbers, and came to agreement on the draft budget recommendation. The budget recommendation includes sufficient salary and benefits funding to hire up to the highest level analyst position in the County's classifications. Staff plans to recruit an analyst at either of the two higher levels (requiring 2 or 4 years experience) and make a decision on the best candidate for LAFCo.

While the net increase to the LAFCo budget remains in line with the rough estimate from the March meeting, roughly half of this increased cost can be absorbed by LAFCo's existing budget and only half of these costs would be passed on to our funding agencies. Last year's agency increases were 7% on average and this year they would be 14%.  This draft budget recommendation will give staff flexibility to hire the best candidate and offer either position level and salary range as appropriate. If LAFCo hires an analyst at the lower of the two levels, any unused salary and benefits would become carryover fund balance applied to offset agency costs the following fiscal year. 


Draft Budget Increase Details
The draft budget shows an overall appropriation increase of 23% compared to last year, with a total appropriation amount of $675,962 (including $25,000 of our contingency). Salaries and Benefits costs are proposed to go up by 34% to hire up to a principal management analyst starting October 1, three months of overlap for cross-training before the current Commission Clerk retires (extra because she plans to use vacation time for the last 4 weeks of her tenure), and the addition of a 0.25 time Clerk thereafter (with no benefits). In addition, there is a 3% cost of living adjustment factored in that has already been approved by Yolo County. To partially offset the increases, the Services and Supplies appropriation was decreased 13% by reducing the professional services account, because with the new analyst, fewer services will need to be contracted out. The budget also must include $15,000 for an audit of FYs 2022-2024. 

Due to a higher-than-expected carryover fund balance at the end of this FY, reducing the contingency from 20% to 15%, and reducing our professional services line item, LAFCo is able to absorb roughly half of the cost increases and pass along only the remaining half of the increase to the funding agencies. Costs to funding agencies would increase by 14% on average (ranging from 8% - 18%, as a city's apportionment percentage goes up when it has higher tax revenue and/or population increases relative to other cities). This is double the average agency cost increase from last year at 7%, but it is much less than the worst case scenario shared at the March meeting.  

The following itemizes the proposed draft budget cost for each agency (and net increase as compared to the previous fiscal year):
City of Davis = $85,021, an increase of $6,559 or 8% (the previous FY increase was $4,419 or 6%)
City of West Sacramento = $96,415, an increase of $12,660 or 15% (the previous FY increase was $4,772 or 6%).
City of Winters = $8,987, an increase of $1,118 or 14% (the previous FY increase was $586 or 8%).
City of Woodland = $85,695, an increase of $13,029 or 18% (the previous FY increase was $7,297 or 11%)
County of Yolo = $276,117, an increase of $33,368 or 14% (the previous FY increase was $17,071 or 8%)

Agency Outreach/Collaboration
At the request of the subcommittee, staff contacted the city managers from Davis, West Sacramento, and Woodland, while Commissioner Biasi would talk to the Winters City Manager directly. Staff did not hear back from Davis or West Sacramento, but did have a conversation with Ken Hiatt from Woodland explaining that LAFCo was considering more than usual increases due to succession planning. He noted concern that many agencies the City must fund were requesting double-digit increases this year, and he would think it over. Commissioner Biasi reported that his city manager indicated the proposed increases were manageable. Staff also emailed the Yolo County Chief Financial Officer and Budget Official regarding the initial worst-case cost of nearly $58,000, and staff responded back that the County "is in a very difficult budget situation for next year. We are struggling to fund our base expenses and are actively planning to make reductions to all departmental budgets. So, yes, it does raise flags for me." Following Commission direction, staff will reach out with more definitive cost amounts and hopefully the proposed cost reduction to $33,368 will help mitigate the impact to the County. 

Next Steps
Following Commission direction on the draft budget, staff will make any changes as directed by the Commission and send the proposed budget to the city/county managers for review and comment. Staff will report on all feedback received and any changes during the final budget hearing on May 23, 2024.
Attachments
ATT A-DRAFT LAFCo 2024-25 Budget
ATT B-Agency Cost Comparison Per Analyst Level
ATT C-Comparable LAFCos FTE
ATT D-Agency Apportionment Calculation FY 24-25

Form Review
Inbox Reviewed By Date
Eric May Eric May 04/18/2024 01:20 PM
Christine Crawford (Originator) Christine Crawford 04/18/2024 02:14 PM
Form Started By: Christine Crawford Started On: 04/15/2024 03:38 PM
Final Approval Date: 04/18/2024

    

Level double AA conformance,
                W3C WAI Web Content Accessibility Guidelines 2.0

AgendaQuick ©2005 - 2024 Destiny Software Inc. All Rights Reserved.