HomeMy WebLinkAbout39-Finance
o
o
o
o
j. e
COUNCIL ACTION CORRESPONDENCE
To Ray Schweitzer, City Administrator Subject Appropriated Reserve Amounts
Warren Knudson, Finance Director
Date September 23, 1986
Meeting Date Sent ember 22, 1986 Agenda Item No. New Business
Action
The City Administrator and Director of Finance were instructed to prepsre
a renort for the Mayor and Common Council which will show the City's
appropriated reserve amounts, potential income~ especially income that
is not shown in the budget, potential liability that is not budgeted
for, and all unused contingency funds.
SC:pa
cc:
SHAUNA CLARK
City Clerk
~r
JIll
...L.
.
iii- _
. (CITY OF SAN BEIOJARDINOO- MEMORANDUQ
To THE HONORABLE MAYOR AND COIt10N COUNCIL
From
WARREN A. KHUDSON
Director Of Finance
October 3, 1986
Subject Report On Appropriated Reserve Amounts
Date
Approved
Date
At the meeting of the Mayor and Common Council of September 22, 1986, the
City Administrator and Director of Finance were instructed to prepare a
report for the Mayor and Common Council which will show the City's appro-
priated reserve amounts, potential income, especially income that is not
shown in the budget, potential liability that is not budgeted for, and
all unused contingency funds.
Appropriated Reserve Amounts and Unused Contingency Funds:
1. The General Fund contains an Appropriated Reserve in the General Govern-
ment section (001-092-53735) of $20,000. This to be used as designated
by the Mayor and Common Council.
2. The Operating Contingency Fund started the fiscal year with a balance
of approximately $1,300,000. During 1986-87 the following amounts
have been transferred from the fund:
Beginning Balance
Renovate IRS Building
Social Service Funding
Charter 186 raises
$1,300,000
(27,281)
(15,000)
oil,08o,344)
177 ,375
en
C'\
:;g
m
(")
'T'
o
C'""J
-,
T1
.."
3. Other Funds:
I
Lv
-""")
The following funds have projected 1986-87 ending fund balances tha~
would be discretionary. During 1985-86 accumulated reserves in the~
funds were used to fund wage settlements. These fund balances depe~
upon actual 1986-87 expense experience and it is not recommended that
they be designated fGr other uses at this time. Ending balances may
also be needed for budget requirements in the next fiscal year.
These funds have no other reserves and are being funded on a year-to-
year basis from either the General Fund (Liability Insurance) or from
changes to City departments (Workers Comp, and Unemployment).
'-n
-7:1
-,.-
Liability Insurance
Workers Compensation
Unemployment Insurance
$ 58,206
91,160
73,000
'$ 222,366
@
_ J2.1. is
-
-
L _
c:> THE HONORABLE r~YOR AND CO~ COUNCIL
MEMORANDUM
OCTOBER 3, 19B6
PAGE - 2
o
o
An additional unobligated amount of approximately $90,765 is available
in the Special Construction Projects Fund.
These anticipated balances will be updated in the mid-year budget review.
Potential Excess Income:
Revenue Sharing:
During 1985-86, $3,618,413 was received from this source. The 1986-87
Budget contains an estimate for one quarterly payment of $593,400. The
quarterly payment received was $610,284, which is $16,884 over the estimate.
We how have information to indicate that Revenue Sharing will not be
renewed. Since early in the year we had been hopeful that Revenue
Sharing in some form and in some amount would be approved to extend
the program past September 30, 1986. Even though until last week we
remained hopeful of a funding extension, the 1986/87 Budget does not
include Revenue Sharing income past September 30, 1986. Any monies in
addition to those budgeted ($593,400) would have been a windfall which
could have been used to supplement existing programs, fund new programs,
or add to our severely low reserves.
Sales Tax:
Second quarter sales tax revenues are up 5.8% from that periOd in the
previous year. The sales tax estimate for 1986-87 is 8% over the
1985/86 figure. With only three months actual revenue available, it
is difficult to make a more accurate estimate.
Salary Savings:
Salary savings are being accrued by positions being left vacant due
to the continuing hiring freeze. Positions that are filled often have
a delay in hiring which also adds to the savings. The Police Depart-
ment has a "Vacancy Management" factor in their budget and therefore
their salary savings is programmed into their budget.
A monthly breakdown of salary savings information for the 1986-87 fiscal
year is presented as follows:
o 0
THE HONORABLE MAYOR AND CDMt10N COUNCIL
MEMORANDUM
OCTOBER 3, 1986
PAGE - 3
o
o
TOTAL
TOTAL SALARY SAVINGS
SALARY SAVINGS USED PURPOSE
JULY $ 65,000 $ 65,000 Mall and Parking
Garage
AUG. 49,387 28,000 Building and Safety
Inspector
$114,287 ' $ 93,000
Potential Liabilities Not Budgeted For:
Liability Insurance:
The amount of $2,000,000 is budgeted for Liability claims for 1986-87.
Approximately $800,000 of that amount is anticipated for normal claims
and the balance would be used toward settling large claims that are being
1 i ti gated.
Major claims against the City that are currently in litigation include:
Potential Liability
Case #1
Case #2
Case #3
Case #4
$100,000 to $500,000
$ 60,000
$200,000
$2,800,000
Specifics of these cases would be appropriately discussed in executive
sess ion.
Large settlements involving pay-outs during this fiscal year would
necessitate borrowing money.
Conclusion:
Since the possibility of continued Revenue Sharing funds no longer
exists, the City's reserve position is critically low. This situation
is the combined result of increased costs in the areas of insurance,
.
o THE HONORABLE f-lAYOR AND cOMr9 COUNCIL
MEMORANDUM
OCTOBER 3, 1986
PAGE - 4
o
o
Workers Compensation, and wage and benefit settlements. Less than
$300,000 outside of normal budgeted costs is available. Ideally a
reserve amount of five percent or approximately $2.3 million should
be available as a safeguard against Revenue shortfalls or natural
disasters. Listed below is a summary of the potential activity of
the, Liability, Workers Compensation, Special Construction, and
Unemployment Funds:
Estimated 1986/87
1986/87 1986/87 1986/87 Ending Fund Bal.
FUND Beg. Fund Bal Budget Est. Potential Liability Using Budget Est.
Liability Ins. $408,303 $3,344,809 $5,7l9,809.:!:. $58,206
Workers Compo $112,691 $1,122,918 $l,122,9l8.:!:. $91,160
Unemployment Ins. $ 73,000 $ 70,734 $ 70,734.:!:. $73,000
Special Const. Proj. $ 90,765 -0- $ -0- $90,765
IJ ....c::. J:, (
WARREN A. KNUDSON
Director Of Finance
WAK/vm