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Staff Report —Fiscal Year 2012-13 Mid -Year Budget Review
February 19, 2013
Expenditure Adjustments
1. Fire Department — Heartland Communications Facility Authority ("HCFA"): $79,423
At its meeting of December 12, 2012, the City Council of the authorized the Mayor sign a
letter of intent for the City to withdraw from the Heartland Communications Facility
Authority ("HCFA"), a Joint Powers Authority providing fire, rescue, and medical aid
dispatch services for it member partners. As a member of the HCFA, the Fire Department
has incurred liabilities related to program hardware and software and dispatcher pensions
(Ca1PERS side fund supplemental assessment), the total present value of which is $79,423.
2. Engineering — Underground Storage Tank Monitoring: $19,999
The City of National City and the San Diego County Department of Environmental Health
have agreed that the City will establish a self -replenishing account and appropriate to it
$19,999 for underground storage tank monitoring expenses to ensure "environmental
compliance".
Adding these recommended adjustments will decrease the projected retained fund balance by
$99,422 to $874,305, resulting in an ending fund balance of $18,791,243.
CONCLUSION
As discussed, the closing figures for FY 2011-12 were much stronger than previously projected,
and although City Council authorized the use of up to $2.3 million in reserve funds to balance
the FY 2011-12 budget, reserves (i.e., fund balances) were not only retained, but grew
significantly.
Looking ahead, the City appears to be on pace to again build upon its fund balances in FY 2012-
13. If projections hold, staff recommends applying any such surplus to reserves, in order to
advance closer to, or possibly achieve, the City's goal of a Contingency Reserve balance
(unassigned fund balance) of at least twenty-five percent of General Fund operating
expenditures. Factors which are likely to affect that outcome include the following:
• Actuarial adjustments by the California Public Retirement System (Ca1PERS) require an
increase in the City's employer contribution to employee pension funds for Fiscal year
2013-14. The City's contribution will increase by 2.903% for miscellaneous employees
and by 4.885% for fire and police safety employees.
• By Council Policy, the City maintains a series of reserves. Because of on -going fiscal
constraints in recent years, the full funding of reserves has been difficult. Staff will be
reviewing current reserve levels as well as the inventory of deferred maintenance and
deferred equipment replacement which may result in recommendations in these areas.