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REOUEST FOR COUNCIL ACTION
CITY OF SAN BERNARDINO
Annie Ramos, Chairman
City of San Bernardino Management Association
Advisory Committee
SUBJECT: Management/Confidential Compensation
FROM:
DATE: September 15, 1992
PREVIOUS COUNCIL ACTION:
May, 1989 - Mayor and Common Council approved Resolution 89-129,
Management and Confidential Employee Compensation and
Benefits Plan.
RECOMMENDED MOTION:
That the salary survey of November, 1991 be fully implemented
effective January 1, 1992 and that the Director of Personnel be
instructed to prepare the necessary amendments to Resolution 6413.
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Annie Ramos
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ST,...F REPORT
MANAGEMENT/CONFIDENTIAL COMPENSATION
SEPTEMBER 21. 1992
In May, 1989, the Mayor and Common Council approved Resolution 89-
129, approving a Management and Confidential Employee Compensation
and Benefits Plan. That Resolution designated the following
specific compensation levels and timelines for implementation:
January 1, 1990
January 1, 1991
4.9% Cost of Living Adjustment (COLA)
4.3% COLA and implementation of
a Benefits Survey
Implementation of Salary Survey
and 3.6% COLA
2.9% COLA and implementation of a
Benefits Survey
January 1, 1992
January 1, 1993
In 1990, with the realization that the City was experiencing
financial difficulties, the Management Association voted to
voluntarily forego their approved increases in the interest of the
City. Consequently, the Management and Confidential employees have
not received a salary adjustment since 1989. By foregoing these
approved increases, the City has saved over $1.1 million dollars.
However, all other employee units have continued to receive
approved salary increases, costing the City $S.6 million.
A balanced budget was adopted by Council on June 24, 1992. A
number of events have occurred since that time that present a much
better revenue picture than previously anticipated. First, a
pending PERS lawsuit was decided in favor of the City and state.
Council took action on June 24, 1992 to transfer the balance of the
PERS refund of $4. S million to the Liability Fund. This action
should fund almost all contingent liabilities, based on the FY
1990/91 Annual Financial Report. Second, a recently completed
financial audit of the City's liability fund has identified $1.3
million in uncollected insurance payments. Risk Management is
currently negotiating the collection of these payments. Third, the
state budget was finally adopted and Finance has done an analysis
of its impact on the city. The City FY 92/93 budget assumed a
$1,067,000 loss in property tax revenues and a $SOO,OOO loss in
motor vehicle in-lieu fees. It now seems evident that the property
tax revenue loss will be $800,000. Motor vehicle in-lieu fees are
still undecided. Assuming these preliminary figures from the State
are accurate and revenues and expenditures remain constant, the
ending General Fund balance is estimated at $2,00S,994 in reserve.
The Management Association is requesting that given these revenue
factors, that the Mayor and Common Council authorize full
implementation of the salary survey as designated by Resolution 89-
129.
Comp Plus completed the survey for 76 management and confidential
classes in November 1991. Based on this survey, compensation
levels and salary ranges have been developed that are comparable to
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the average
Implementation
which includes
level for similar positions in like cities.
of the survey for calender year 1992 is $568,036,
both salary costs and variable benefits.
RECOMKEHDATJ:ON
That the salary survey of November, 1991 be implemented effective
January I, 1992 and that the Director of Personnel be instructed to
prepare the necessary amendments to Resolution 6413.
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C I T Y 0 F SAN B ERN A R DIN 0
INTEROFFICE MEMORANDUM
CITY ADMINISTRATOR'S OFFICE
DATE: September 21, 1992
TO: Mayor and Common Council
FROM: Fred Wilson, Acting Director of Finance
SUBJECT: FY 1992/93 Budget
COPIES: Shauna Clark, City Administrator
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I have prepared an overview of the city's fiscal condition, which
outlines the city's current status as well as provides a brief
historical perspective since 1988.
In 1988, the city had accumulated an internal service fund deficit
which amounted to approximately $13, 100,000. According to the
former Finance Director, the primary reason for the deficit was due
to the fact that internal service fund charges assessed by the city
to the operating departments were insufficient to cover internal
service fund operations. This problem was recognized by the City
Administrator and appropriate steps were taken to address this
deficit. Beginning in fiscal year 1989/90, increased user charges
were established and increased interfund transfers from the general
fund to the internal service funds were initiated to begin to
reduce the accumulated deficits.
In fiscal year 1990/91, the imposition of booking fees as well as
downturn in local economic conditions compounded the problem not
only of balancing the budget but also reducing the internal service
fund deficits. In November 1991, the city was forced to reopen
budget deliberations in an effort to balance the budget. After a
series of budget hearings, the Mayor and Council approved a
combination of budget cuts and new revenues which collectively
saved approximately $2.4 million in the general fund. Twenty-seven
positions were eliminated as part of the budget cuts. In spite of
these actions, a continual decline in revenues resulted in the
city's ending general fund balance for that fiscal year to be
($600,000). However, the internal service fund cash balance
deficits were reduced by an additional $1,400,000 based on the
increased user charges.
Last January, in response to a further weakening economy, the Mayor
and Council approved a series of budget reduction measures in an
effort to rebalance the fiscal year 1991/92 budget. It was
estimated that, unless such measures were implemented, the city
would end the fiscal year with general fund expenditures exceeding
general fund revenues by approximately $6,000,000.
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In response to this anticipated shortfall, all departments were
requested to recommend a five percent decrease in their existing
budgets. These department reductions, along with a number of other
budget reduction measures were approved by the Mayor and Council
and totaled approximately $6,000,000. These actions were approved
in late January 1992 and eliminated a total of 57 additional
positions city-wide.
In March 1992, the city Administrator presented a memorandum to the
Mayor and Council outlining information for the fiscal year 1992/93
budget which included a preliminary analysis of general fund
revenues and expenditures. Anticipating no real economic recovery
and assuming no change in terms of funding the departments coupled
with the mandatory set aside for 186 salaries and accrued booking
fees, it was estimated that a shortfall of approximately $2.9
million could be anticipated. A number of options were presented
to the Mayor and Council in an effort to close the gap. The
options which were ultimately approved, inCluding an additional
reduction in all department budgets by 2.7 percent, refinancing of
city Hall and reducing the appropriated reserve. These actions
coupled with additional cutbacks and new revenues identified in
Attachment A totaling $2.6 million led to the adoption of a
balanced budget for fiscal year 1992-93.
The unknown factor at that time of budget adoption in June 1992 was
the impact of the proposed cuts in the state budget. The city's
adopted budget anticipated a loss of approximately $1,067,000 in
property tax revenues and a $500,000 loss in motor vehicle in-lieu
fees.
with the recent adoption of the state budget, preliminary figures
have been received relative to the impact of the state budget cuts
on the city. As noted above, the budget adopted by the Mayor and
council in June 1992, assumed a $1,067,000 loss in property tax
revenues and a $500,000 loss in motor vehicle in-lieu fees. The
actual information received from the League of California cities
indicated that the property tax revenue loss will be $761,500.
Motor vehicle in-lieu fees were not impacted by the state action.
Although final confirmation has not yet been received from the
state relative to actual budget cuts, Attachment B has been
developed which details the general fund budget for fiscal year
1992/93. Assuming revenue and expenditure projections remain
constant and no additional revenue cuts result from the state, the
ending general fund balance is estimated at $2,050,809. The
primary reason for the increase in the proj ected ending fund
balance is due to slightly increased revenues in sales tax, utility
tax and property tax as noted on this spreadsheet.
In addition, analysis of revenue projections through August 1992
indicates that overall development fees are down approximately
$150,000 over last year at this time. However, sales tax revenues
are up approximately $180,000 over last year at this time. utility
tax revenues appear to be on target. The other major revenue
categories are on target relative to budget through August 1992.
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This initial analysis indicates that any
local economic conditions will enhance the
the balance of the fiscal year.
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type of improvement in
city's revenue base for
with respect to the liability fund, Council took action on June 24,
1992 and transferred the balance of the PERS refund which is
estimated at approximately $4,578,000 to the liability fund. This
action should fund almost all contingent liabilities which are
based on the fiscal year 1990-91 annual financial report.
CITY HALL REFINANCE
As noted above, one of the revenue enhancement proposals adopted by
the Council in March 1992 was the refinancing of City Hall. The
objective of this refinancing process was to provide additional
cash to replenish the internal service funds which were in cash
overdraft positions.
By March 1992, the city had reduced the internal service fund
deficits to approximately $9.2 million. Listed below are the funds
and their allocation from the refinancing process:
Public Facilities Renovation Fund
Cemetery Fund
Animal Control Fund
Telephone Support Fund
Motor Pool Fund
Self-Health Insurance Fund (John Hancock)
Self Insurance Fund (Blue Cross)
Liability Fund
Worker's Compensation Fund
Total
$ 969,205.86
197,801.72
320,720.93
550,383.85
176,555.51
1,458,819.23
476,714.28
2,524,900.31
2,524.900.31
$9,200,000.00
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with the exception of the contingent liabilities in the worker's
compensation fund and the CATV fund which is currently operating
with a fund deficit of approximately $380,000, the internal service
fund deficits have been eliminated as a result of the City Hall
refinance.
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BUDGET OUTLOOK
It is important to note that, approximately $6.5 million in one
time measure were utilized to balance this year's budget. This
figure represents nine (9) percent of the total general fund
budget. The use of one time revenues is obviously not a preferred
budget balancing tool. The city however for the first time in many
years is projecting a healthy general fund ending balance and has
eliminated the major internal service fund deficits. This is a
significant improvement in the city's fiscal situation since 1988.
Careful management of resources will be necessary to ensure that
the positive fiscal condition will continue into the future.
ED A. WILSON
Acting Finance Director
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ATTACHMENT A
1.
Eliminate Appropriated Reserve -
(Council took action in March 1992 to
reduce this reserve from a goal of $1
million to $500,000 for the next fiscal
year. Although the establishment of a
reserve is highly desirable, it is
recommended that this reserve be considered
for elimination for FY 1992/93.)
2 .
Reduce Funding Set Aside for Charter
section 186 Compensation Increases -
($1.6 million was included to fund
mandated 186 increases. It is
recommended that this reserve be considered
for reduction to $1.3 million due to an
anticipated downtrend in the increases that
the benchmark cities will grant for compen-
sation adjustments to safety employees.)
Fund Police Department Overtime Costs From
Assessment District carry Over -
(Approximately $600,000 will be carried
over from FY 1991/92 budget which was set
aside to fund police personnel services.
This carryover results from salary savings
realized as a result of the timing delay
involved with hiring. Funding overtime costs
is consistent with the intent of the district
as it helps to ensure that adequate police
patrols will be maintained city wide.
3.
4 .
Transfer Balance of CMO Proceeds to General
Fund -
(This funding source represents the remaining
amount of the proceeds which resulted from the
selling of the city's interests in outstanding
Mortgage Revenue Bonds.)
Use EDA Funding for Community Against
Drugs -
(This program has been historically
funded from the general fund. EDA is
exploring the feasibility of utilizing
EDA funding for FY 1992/93 for this
program.)
5.
6.
Vacancy Factor - City Wide -
(Vacancies occur throughout the year.
It generally takes at least two months
to fill a vacant position. Salary
savings are achieved during this time
frame.)
$500,000
$300,000
$600,000
$438,000
$ 44,500
$200,000
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7. Increase Engineering Fees -
(Engineering fees were last increased
in 1990. The fees currently only recover
35-40 percent of the cost of providing
the services. It is recommended that
the fees be increased to achieve a more
equitable cost recovery rate. The fees
could be increased to achieve 60 percent
cost recovery while still retaining a
median rate for comparison purposes with
surrounding cities.)
8. Bill EDA for Police Officer in Mall -
(EDA assumed the responsibility for
funding mall security as part of the FY
1991/92 mid year budget cuts. The Police
Department provides the services, on a
full-time basis, of a police officer to
assist with security. The cost for this
position is currently fully absorbed in
the Police Department budget. Since the
services of this officer only benefit the
mall, it is recommended that EDA fund this
position for 1992/93.)
9. EDA Reimbursement for Enterprise Zone Fee
Waivers -
(The enterprise zone ordinance permits
qualifying projects to receive exemptions
from payment of city development fees.
Over the last 12 months, approximately
$100,000 has been exempted in development
fees. It is proposed to request EDA to
reimburse the City for the lost revenues.
It should be noted that an item is pending
before the Legislative Review Committee
which would require EDA to reimburse the
City for future incentives.)
10. Apply utility Users Tax to Cellular Telephone
Base Monthly Charges -
(It is proposed to apply the utility users
tax to cellular telephone base monthly
charges. )
11. Reduce civic & Promotional Funding -
(As part of the mid year budget cuts,
$15,000 was eliminated from this fund. It
is proposed to eliminate an additional
$15,000 from this account for FY 1992/93.)
TOTAL:
$250,000
$ 64,700
$100,000
$125,000
S 15.000
$2,637,200
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PRELIMINARY REVISED
GENERAL FUND SUMMARY
1992/93
Beginning Undesignated Fund Balance*
Plus: Estimated Revenues 1992/93
Transfers In 1992/93
Available For Budget Purposes 1992/93
Less: Proposed Expenditures 1992/93
Transfers Out 1992/93
Estimated Ending Undesignated Fund Balance
Less:
Total Reserve Estimated On Budget
Summary 6/22/92
Additional Reserve Available 1992/93
* Includes $2,804,400 in PERS funds
Explanation of Additional Reserve
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1. Sales Tax Actual 1991/92
Sales Tax Estimate 1991/92
Net Additional Sales Taxes
2. Utility Tax Actual 1991/92
utility Tax Estimate 1991/92
Net Additional utility Taxes
3. Property Taxes Actual 1991/92
Property Taxes Estimate 1991/92
Net Additional Property Taxes
4. Minor Other Revenue Variances
TOTAL ADDITIONAL REVENUES
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ATTACHMENT B
4,101,889
68,954,816
3,006,728
70,368,019
3,644,605
20,021,349
19,378,771
15,257,480
14,492,573
9,066,338
8,927,789
76,063,433
74,012,624
2,OSO,809
-484,400
1,566,409
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642,578
764,907
138,549
20,375
1,566,409
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