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HomeMy WebLinkAboutFiscal Year 2012-13 Year End Budget Adjustments - Self InsurDept. ID FN 13-018 Page 1 of 4 _ Meeting Date: 12/16/2013 MEETING DATE: 12/16/2013 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Lori Ann Farrell, Director of Finance SUBJECT: Approve Fiscal Year 2012/13 Year -End Budget Adjustments and Authorize the City Manager to create a Seff-Insurance Liabilitv Claims Loss Reserve. Fund Statement of Issue: The Finance Department is currently undergoing the year-end closing process for Fiscal Year 2012/13, which began on October 1, 2012, and ended on September 30, 2013. Certain technical adjustments need to be made to reconcile the budget with actual expenditures incurred and to comply with auditing, actuarial, accounting or legal requirements. City Council authorization is requested to perform these reconciliations in order to close Fiscal Year 2012/13. There are sufficient revenues, available cash, and/or fund balances to support the adjustments. Please note that additional, unanticipated expenditures have been incurred in the current fiscal year, in the FY 2013/14 Adopted Budget. While those specific items are not contained herein, and will be. addressed at mid -year, the year-end close-out process may require the use of fund balances to address these budgetary shortfalls. Financial Impact: 1. General Fund (100): $810,332 2. Retiree Supplemental (703): $768,000 3. Retiree Medical (702): $424,000 4. Redevelopment Obligation Retirement Fund , (RORF) Administration Fund (350): $1,041,385 5. Debt Service Funds: Grand Coast (405), Bella Terra (410), HBPFA (401), Mello Roos (406) and Judgment Obligation Bonds (707) $290,025 6. Self -Insurance Liability Claims Loss Reserve Fund (237): $1,019,414 7. Specific Events Fund (101): $102,418 8. Grant Funds (Various); $510,377 Recommended Action: A) Approve year-end adjustments to the Fiscal Year 2012/13 Adopted Budget in the Funds and by the amounts contained in Attachment 1 (Fiscal Year 2013/13 Recommended Year -End Budget Adjustments by Fund); and, B) Authorize the City Manager to perform all actions necessary to create the Self -Insurance Liability Claims Loss Reserve Fund required by Chapter 3.14 of the Huntington Beach Municipal' Code titled "Self -Insurance Liability Claims Loss Reserve." Item 11. - 1 BB -1 4- Dept. ID FN 13-018 Page 2 of 4 Meeting Date: 12116/2013 Alternative Action(s): Do not approve the recommended action and direct staff accordingly. Analysis: Technical year-end budget adjustments to the Fiscal Year 2012/13 Revised Budget are requested to align appropriations in certain Funds with actual expenditures incurred through September 30, 2013, as required to maintain City services and programs; contribute the full Annual Required Contribution (ARC) to the City's Retiree Medical and Supplemental Plans pursuant to the new expedited payment schedules; align appropriations with actual expenditures for the RORF (Redevelopment Obligation Retirement Fund); comply with Chapter 3.14.010 of the Municipal Code as it relates to the City's self-insurance liability program; pay down debt obligations related to Community Facilities Districts and other bond debts; and reconcile expenditures for the specific events fund and various grant -funded programs. As actual expenditures cannot exceed the appropriation amounts contained in the Adopted Budget, adjustments are also required to ensure compliance with Generally Accepted Accounting Principles (GAAP), Governmental Accounting Standards Board (GASB) and other regulatory, contractual or legal requirements. Please note these appropriation increases are fully offset by commensurate amounts of revenues, available cash or fund balances in each Fund. 1. General Fund (100): General Fund budget appropriations are requested by various City departments totaling $810,332 as follows: a. The Police Department is requesting $381,847 to cover unexpected fee increases from the Animal Care Services contract with the County of Orange and to accrue an additional quarter of the contract to FY 2012/13 to ensure compliance with GAAP. b. The Economic Development Department is requesting budget appropriation increases for Sales Tax Rebate payments of $255,000 to AES and Pinnacle Petroleum, and $120,000 for the HB Marketing and Visitors Bureau as a result of increases in Sales Tax and Transient Occupancy Tax revenue for FY 2012/13. c. The Community Services Department is requesting a $53,485 budget increase to cover Marine Safety's overtime expenses as a result of the agreement between the City and Abercrombie & Fitch to provide live video feed services to their stores. 2. Retiree Supplemental (703) and Medical (702) Funds: The Retiree Supplemental and Retiree Medical Funds are Fiduciary Funds that account for contractually required payments to retirees under the City's Retirement Plan. The City's ARC pays for the benefits to the City's eligible retirees, costs associated with administering the plans, and contributions towards the Plans' unfunded actuarial accrued liabilities. Based upon actuarial calculations prepared by the City's independent actuaries, Bartel & Associates, true -up payments of $768,000 and $424,000 to the Retiree Supplemental and Medical Plans, respectively, are needed to comply with approved plans to eliminate unfunded liabilities for these plans over a ten-year period ("16 to 10 Plan" for Retiree Supplemental and "25 to 10 Plan" for Retiree Medical). The additional payments for both plans will be spread proportionately throughout the City's departments and funds, including the City's General Fund. These payments comply with Governmental Accounting H.s -1 55- Item 11. - 2 Dept. ID FN 13-018 Page 3 of 4 Meeting Date: 12/16/2013 Standards Board (GASB) Statement No. 27 "Accounting for Pensions by State and Local Governmental Employers." 3. Redevelopment Obligation Retirement Fund: RORF (350): The RORF Fund and the Successor Agency were created as a result of the statewide dissolution of redevelopment. Successor Agencies oversee the schedule of payments and administrative costs associated with the dissolution. The Oversight Board, responsible for reviewing and approving financial obligations as incurred by the Successor Agency, approved ROPS II (Recognized Obligations Payment Schedule) and ROPS III associated with expenses incurred October 1, 2012, through June 30, 2013. The RORF Fund appropriation needs to be adjusted to reflect ROPS II, ROPS III, and the partial payments of ROPS IV that account for costs and payments through September 30, 2013. As a result, a budget appropriation request of $1,041,385 is needed to reconcile the payment schedules approved by the Successor Agency and the Oversight Board with the budget. 4. Grand Coast (405) and Bella Terra (410) Debt Service Funds: Finance staff regularly monitors the capital markets for refunding opportunities related to municipal securities in order to reduce bonded debt service costs. Earlier this year, the municipal bond market improved such that refunding certain Community Facilities Districts (CFDs) bonds became economically beneficial to the property owners within the CFDs. The debt service savings reduced the special taxes paid by the affected property owners over the remaining life of the bonds. As a result, budget appropriation requests of $150,675 for Grand Coast (405) and $133,710 for Bella Terra (410) are needed to reflect restructured debt service amounts. 5. Huntington Beach Public Finance Authority (401), Mello Roos (406) and Judgment Obligation Bonds (707) Debt Service Funds: Debt Service Funds contain fees such as arbitrage and bond trustee fees that were incurred. A budget adjustment of $5,640 is requested to reconcile these additional expenses. 6. Self -Insurance Liability Claims Loss Reserve Fund (237): On Monday June 17, 2013, the City Council authorized the acceptance of a one-time payment from the County of Orange in the amount of $1.0 million as settlement for claims by the City against the County for over -collecting property tax administration fees. At that time, staff recommended that these funds be set -aside to help address potential unanticipated claims and litigation against the City. As the City is self -insured for its general liability claims and litigation costs, up to $1.0 million per individual claim, staff recommends the use of these one-time funds to both comply with Chapter 3.14.010 of the Municipal Code titled "Self-insurance Liability Claims Loss Reserve" and to meet the Self Insurance Retention (SIR) requirement of $1.0 million related to the City's self-insurance program for general liability expenses. 7. Specific Events Fund (101): The Specific Events Fund was established to identify costs associated with the City's special events. The Community Services Department is requesting $102,418 in budget appropriation to reflect actual expenditures associated with special events. These expenditures are cost -neutral as a commensurate amount of revenue has been received. Item 11. - 3 HB -1 56- Dept. ID FN 13-018 Page 4 of 4 Meeting Date: 12/16/2013 8. Grant Funds (Various): The City applies for and receives grants throughout the year, even after the City's annual budget has been adopted. On February 19, 2013, the City Council adopted Resolution Number 2013-18 authorizing the Finance Director and/or the City Manager to amend the adopted budget, as necessary, to accept and appropriate any grant funding less than $50,000 from a single source or grantor. Donations and grant awards exceeding $50,000 from a single source or grantor still require City Council approval. The Resolution was later amended on September 3, 2013, to increase the threshold requiring City Council approval from $50,000 to $100,000, beginning Fiscal Year 2013/14. However, as Fiscal Year 2012/13 falls under the original threshold amount of $50,000, budget adjustments totaling $71,388 in the State Literacy Grant Fund 916 ($55,760) and the Urban Areas Security Initiative (UASI) Program Fund 909 ($15,628) are needed to ensure grant compliance and to increase the appropriations to the level of the grant funds received. In addition, as a condition of receiving certain grants, the City must fulfill a local match requirement in order to receive these grant funds. City Council authorization is requested to utilize a total of $438,989 in General Fund revenue to comply with local match requirements, and/or to fund previously incurred expenses in various Departments in administering numerous grants. These actions are necessary to remove existing negative fund balances in the grant funds in anticipation of the year-end financial statement audit. There is sufficient General Fund revenue to offset these local match requirements and grant -related expenses. The above referenced actions are necessary to perform year-end close-out activities for FY 2012/13. While the Finance Department is closing FY 2012/13, it must also remain vigilant of the budgetary trendsf in the fiscal year that started October 1, 2013 (FY 2013114). It is important to note the FY 2013/14 Adopted Budget is currently underfunded for the City -paid employer share of PERS costs in the Fire Department by up to $564,928 (twelve month impact). As such, it is possible a FY 2013/14 budget adjustment will be needed at mid -year to address the modified employer share of retirement costs. Additionally, the FY 2013/14 Adopted Budget contains $250,000 for lifeguard services in Sunset Beach. On September 16, 2013, the Fire Department recommended and the City Council approved an enhanced service delivery model estimated at an annual cost of $416,446. City Council authorization may also be requested at a later date to fund a budget adjustment in FY 2013/14 for $166,446 to fully fund the approved service level. Environmental Status: Not Applicable. Strategic Plan Goal: Enhance and Maintain Public Safety Improve Long -Term Financial Sustainability Enhance Economic Development Improve the City's Infrastructure Attachment(s): 1. Fiscal Year 2012/13 Recommended Year -End Budget Adjustments by Fund HB -1 57- Item 11. - 4 ATTACHMENT 1 Fiscal Year 2012/13 Recommended Year -End Budget Adjustments by Fund GENERAL FUND Fund No Fund Name Appropriation Dept 100 General Fund $ 381,847 Police 100 General Fund $ 255,000 Economic Development 100 General Fund $ 120,000 Economic Development 100 General Fund $ 53,485 Community Services/Marine Safety $ 810,332 RETIREE SUPPLEMENTAL FUND Fund No Fund Name Appropriation Dept 703 Retiree Supplemental $ 768,000 All RETIREE MEDICAL FUND Fund No Fund Name Appropriation Dept 702 Retiree Medical $ 424,000 All REDEVELOPMENT OBLIGATION RETIREMENT FUND Fund No Fund Name Appropriation Dept 350 RORF $ 1,041,385 Economic Development DEBT SERVICES FUND Fund No Fund Name Appropriation Dept 405 Debt Svc Grand Coast CFD 2000-1 $ 150,675 Finance 410 Debt Svc Bella Terra CFD 2003-1 $ 133,710 Economic Development 707 Debt Svc Judgement Oblig Bonds $ 2,915 Finance 401 Debt Svc HBPFA $ 2,390 Finance 406 Debt Svc Mello Roos $ 335 Finance $ 290,025 SELF-INSURANCE LIABILITY CLAIMS LOSS RESERVE FUND Fund No Fund Name Appropriation Dept 237 Self -Insurance Claims Reserve $ 1,019,414 Non -Departmental SPECIFIC EVENTS FUND Fund No Fund Name Appropriation Dept 101 Specific Events $ 102,418 Community Services GRANTSFUNDS Fund No Fund Name Appropriation Dept 916 State Literacy Grant $ 55,760 Library Services 909 UASI Program $ 15,628 Police $ 71,388 Fund No Fund Name Transfer -In Dept 764 FEMA/EOC $ 750 Fire 974 Assistance Firefighter Grant $ 1 Fire 947 EMPG 10/11 $ 293 Fire 975 EMPG 11/12 $ 774 Fire 940 LSTA Computers to Go Grant $ 397 Library Services 916 State Literacy Grant 08/09 $ 591 Library Services 930 State Literacy Grant 09/10 $ 2,279 Library Services 944 State Literacy Grant 10/11 $ 2,932 Library Services 954 Assembly Bill 912 FY 10/11 $ 30,362 Police 967 ABC Grant 11/12 $ 5,381 Police 932 SLESF Grant 09/10 $ 68,118 Police 919 Avoid the 28 DUI $ 3,601 Police 941 Homeland Security UASTTLO 0910 $ 275 Police 939 Domestic Violence CY2010 $ 163,190 Police 957 Domestic Violence Program 2011 $ 128,621 Police 931 Traffic Safety Grant 09/10 $ 13,393 Police 950 Office of Traffic Safety 10/11 $ 18,032 Police Item 11. - 5 HB --138,989