2015 Aug 03 - CC PACKET SPC (Strategic Planning)SPECIAL AGENDA
EL SEGUNDO CITY COUNCIL
EL SEGUNDO PUBLIC LIBRARY
111 W. Mariposa Avenue, El Segundo, CA 90245
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jurisdiction of the City Council and /or items listed on the Agenda during the Public Communications portion of this
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SPECIAL MEETING OF THE EL SEGUNDO CITY COUNCIL
MONDAY, AUGUST 3, 2015
El Segundo Public Library
111 W. Mariposa Avenue, El Segundo, CA 90245
6:00 p.m.
(Strategic Planning Workshop)
6:00 P.M. SESSION
CALL TO ORDER
PLEDGE OF ALLEGIANCE
ROLL CALL
PUBLIC COMMUNICATIONS — (Related to City Business Only) — 5 minute limit per person,
30 minute limit total) Pursuant to Government Code § 54954.3(a), the only public comment that will be
permitted during this Special Meeting is that pertaining to the agenda item listed below. Individuals who have
received value of $50 or more to communicate to the City Council on behalf of another, and employees speaking on
their behalf of their employer, must so identify themselves prior to addressing the City Council. Failure to do so shall
be a misdemeanor and punishable by a fine of $250. While all comments are welcome, the Brown Act does not allow
Council to take action on any item not on the agenda. The Council will respond to comments after Public
Communications is closed.
SPECIAL ORDERS OF BUSINESS:
Consideration and possible action regarding a strategic planning workshop resulting in
City Council receiving and filing of staff's analysis and recommendations for the Fiscal
Year 2015 -2016 Preliminary Budget. Staff will present a brief overview
challenges /limitations, goals and potential strategies associated with preparation and
planning of the fiscal year budget including, without limitation, the following matters:
a. Third Quarter Financial Update
b. Update fund balance for Fiscal Year 2014 -2015
c. Fiscal Year 2015 -2016 Budget Assumptions
d. Staff Requests for Fiscal Year 2015 -2016
i. Departments needs for Fiscal Year 2015 -2016
1. Personnel
2. Supplies
3. Services
4. Equipment
e. Revenue initiative
f. Capital assets
i. Update on infrastructure projects funded in Fiscal Year 2014 -2015 and
infrastructure projects plan for 2015 -2016
g. Budget Calendar: Setting of dates for additional budget workshops and meetings.
2. Council may raise other issues relating to any and all City revenues and expenditures,
including but not limited to land use developments, fiscal policies, capital projects and
potential budget reduction items for consideration as part of staffs preparation of the FY
2015 -2016 Preliminary Budget.
Recommendation: 1) Receive and
Preliminary FY 2015 -2016 Operatin g
Calendar; and 3) alternatively, tak e
desirable.
ADJOURNMENT
POSTED: DATE: 30 • k '
file Staff Report regarding preparation of the
Budget; 2) Approve the FY 2015 -2016 Budget
such additional, related, action that may be
TIME: c-5-
NAME:
F
EL SEGUNDO CITY COUNCIL MEETING DATE: August 3, 2015
AGENDA STATEMENT AGENDA HEADING: Special Orders of Business
AGENDA DESCRIPTION:
Consideration and possible action regarding a strategic planning workshop resulting in City
Council guidance to staff for preparing the Fiscal Year 2015 -2016 Preliminary Budget. Staff will
present Fiscal Year 2014 -2015 third quarter updates, challenges /limitations, assumptions
associated with preparation and planning of the upcoming fiscal year budget. (Fiscal Impact:
none)
RECOMMENDED COUNCIL ACTION:
1. Council to provide direction to staff regarding preparation of the Preliminary FY 2015-
2016 Operating Budget;
2. Alternatively, take such additional, related, action that may be desirable.
ATTACHED SUPPORTING DOCUMENTS:
none
FISCAL IMPACT: None
Amount Budgeted: $0
Additional Appropriation: N/A
Account Number(s): None
ORIGINATED BY:
Trang Nguyen, Acting Fiscal Services Manager.
Steve Jones, Business Services Manager
ft7Dl ? /1WILIA04 1]1W
APPROVED BY:
Misty Cheng, Interim Finance Director
Greg Carpenter, City Manager Al
BACKGROUND AND DISCUSSION:
Third Quarter Financial Review Fiscal Year 2014-2015
Staff has reviewed all revenues and expenditures for midyear Fiscal Year 2014 -2015, with an
emphasis on the General Fund, to determine if all sources and uses are on target with the
originally adopted budget and to highlight any areas that may end the fiscal year significantly
above or below budget. As we review the third quarter results and begin the budgeting process
for FY 2015 -2016, the City continues to recover from the economic recession and financial
challenges.
3
General Fund Revenues
The following is an update from midyear review of major General Fund revenues and the
performance of each source through third quarter plus estimates to yearend:
Table 1: General Fund Revenues
General Fund Expenditures
The following is an update from midyear review of General Fund expenditures through third
quarter plus estimates to yearend:
M
Variance
Over/
Current Year
FY 2014-
FY2014-
(Under) FY
Through
2015Adopted
% of Budget
2015 Year-
2014 -2015
Revenue Source
613012015
Budget
Received
end Estimate
Bud et
Business License
10,853,876
11,118,000
97.62%
10,854,100
- 263,900
Sales & Use Tax
5,055,575
7,942,500
63.65%
8,074,400
131,900
Sales Tax in Lieu
2,907,652
2,758,000
105.43%
2,907,652
149,652
Property Tax
6,274,475
6,356,600
98.71%
6,621,400
264,800
Transient Occupancy (TOT)
3,458,622
5,459,200
63.35%
5,200,000
- 259,200
Charges for Services
4,111,431
4,720,500
87.10%
4,619,400
- 101,100
Electric Utility Tax
2,017,153
3,050,000
66.14%
3,250,000
200,000
Franchise Tax
3,500,087
3,075,000
113.82%
3,671,300
596,300
Cogeneration Electric
822,353
1,690,000
48.66%
1,230,000
- 460,000
License & Permits
1,516,854
1,720,000
88.19%
1,829,500
109,500
Gas Utility Tax
1,917,752
3,000,000
63.93%
2,800,000
- 200,000
Interest/Rentals
244,398
247,000
98.95%
350,000
103,000
Tax Resolution Agreement
4,843,034
5,108,300
94.81%
4,843,034
- 265,266
Other Revenues
4,156,228
3,997,600
103.97%
4,413,178
415,578
Total General Fund Revenues
51,679,489
60,242,700
85.79%
60,663,964
421,264
Net of Transfers
Transfers In
0
400,000
0.00%
0
- 400,000
51,679,489
60,642,700
85.22%
60,663,964
21,264
Total General Fund Revenues
General Fund Expenditures
The following is an update from midyear review of General Fund expenditures through third
quarter plus estimates to yearend:
M
Table 2 — General Fund Fxpenditures by Department
Department
Current
Year
Through
613012015
FY 2014 -2015
Adopted
Budget I
% of
Budget
Sent
FY2014 -2015
Year -end
Estimate
Variance Over/
(Under) FY
2014 -2015
Budget
Elected Officials
611,079
1,016,000
60.15%
857,500
- 158,500
Administrative Support
3,332,235
3,975,900
83.81%
3,786,600
- 189,300
Police
13,191,849
18,792,300
70.20%
18,489,100
- 303,200
Fire
10,167,873
14,160,100
71.81%
13,475,800
- 684,300
Communication Centers
1,036,703
1,398,300
74.14%
1,390,400
-7,900
Planning & Building
1,874,214
2,685,100
69.80%
2,529,600
- 155,500
Safety
Public Works
3,848,564
5,925,600
64.95%
5,873,400
- 52,200
Recreation and Parks
3,506,933
5,082,200
69.00%
4,806,900
- 275,300
Library
1,543,460
2,188,400
70.53%
2,026,900
- 161,500
Non- department
4,351,163
4,337,800
100.31%
5,107,500
769,700
Transfers out
3,432,312
4,576,400
75.00%
4,576,400
0
Total General Fund
46,896,385
64,138,100
73.12%
62,920,100
- 1,218,000
Expenditures
Str•ate;�ic Planning -- Fiscal Year 2015 -2016 General Fund
The yearend projections for FY 2014 -2015 are used as the base for building the preliminary
estimates for the FY 2015 -2016 budget. The following assumptions were used to forecast the
FY 2014/2015 preliminary revenues and expenditures:
General Fund Revenues
In preparing for Strategic Planning for next year's budget, staff analyzes the performance of all
General Fund revenues with additional emphasis on the City's core tax revenues and fees for
services. Staff utilizes historical data and information from outside consultants as well as
industry experts to predict future revenues for this sector.
Over the past year, the City has experienced a modest recovery in the business to business tax
base and overall this sector appears to be recovering. This recovery will help to stabilize and add
confidence to the forecasted revenues going forward for this tax base.
The most vulnerable revenues are those effected by the fluctuations for the price of natural gas.
Currently, natural gas is down approximately 35% to date when compared to the 2014 calendar
year. Franchise Tax, Gas Utility User Tax, and Cogenerated Electric Utility User Tax are the
main categories effected by natural gas pricing. Other revenue categories, with the exception of
Interest on Investments appear to be stabilizing as well with moderate growth predicted.
Below is a summary of the revenue assumptions used for the FY 2015 -2016 projections as
compared to FY 2014 -2015 adopted budget:
6
• Property Tax — $342,900 increase based on increased property assessments but is subject
to pending reassessment appeals.
• Transient Occupancy Tax (TOT) — $650,200 net increase due to projected hotel openings.
The Aloft hotel is projected to open in January 2016, Fairfield Inn & Suites is projected
to open in July 2016, and Hampton Inn & Suites is scheduled to open September 2016.
• Sales Tax /Sales Tax in Lieu — $2,200,500 increase due to two major reasons:
• The phase out of the triple -flip in January 2016; The City will not be accruing at
the old 0.75% triple -flip rate and will begin accruing at the full 1.00% normal
local allocation rate. Included in the projection is "The Point" and "Elevon"
estimated retail sales.
• The strengthening of sales statewide as well as locally.
• Charges for Services — $56,300 increase due to forecasted increase in demand for
permits /inspections.
• Gas Utility Users' Tax and Franchise Fees — $1,225,000 decrease due to the fluctuation
of the price of natural gas. Therefore these categories are estimated at a very
conservative level due to the price of natural gas being down 35% through July 2015
when compared to the 2014 calendar year.
• Other Revenues — $200,000 increase from Chevron to reinforce Economic Development.
Table 3 — General Fund Revenues by Cateearies
FT
Adopted FY
Projected FY
2014 -2015
2015 -2016
Variances
Business License
11,118,000
11,103,800
(14,200)
Sales & Use Tax
7,942,500
10,691,700
2,749,200
Sales Tax in Lieu
2,758,000
2,209,300
(548,700)
Property Tax
6,356,600
6,699,500
342,900
Transient Occupancy (TOT)
5,459,200
6,109,400
650,200
Charges for Services
4,720,500
4,776,800
56,300
Electric Utility Tax
3,050,000
3,250,000
200,000
Franchise Tax
3,075,000
2,450,000
(625,000)
Cogeneration Electric
1,690,000
1,290,000
(400,000)
License & Permits
1,720,000
1,671,400
(48,600)
Gas Utility Tax
3,000,000
2,400,000
(600,000)
Interest /Rentals
247,000
312,400
65,400
Tax Resolution Agreement
5,108,300
5,500,000
391,700
Other Revenues
3,997,600
4,207,700
210,100
Total O eratin Revenues
60,242,700
62,672,000
2,429,300
Transfer in Traffic Safety
200,000
50,000
(150,000)
Transfer in Golf Course
200,000
-
(200,000)
Transfer in Capital Improvement
-
318,600
318,600
Total Transfer -in
400,000
368,600
(31,400)
Grand Total
60,642,700
63,040,600
2,397,900
FT
General Fund Expenditures
General Fund expenditure assumptions for FY 2015 -2016 are as follows, as compared to the
prior year adopted budget:
The City is still in negotiations with all 6 labor groups therefore the forecast is being created
based on the expiration of the contracts and related concessions as of October 1, 2014 and.
• Salaries and benefits — increase of approximately $1,937,600 due to:
— Filled /unfilled approved positions - $462,600 salary and benefits
• Human Resources Manager
• Economic Development Manager
• Building Safety Manager
• Two (2) Senior Civil Engineers
— Council approved concession with Management Confidential and Executive
groups for a net impact of $35,000
— Public Safety overtime - $350,000
— California Public Employees' Retirement System (Ca1PERS) Rate Increases —
$620,000 increase in the City's pension contribution due to the discount rate
reduction implemented by Ca1PERS. This impacts both rates, safety and non-
safety:
• Safety Increase: $514,000
• Misc. Group Increase: $106,000
— Health Benefits - $150,000 estimated increase based on historical trends, these
amounts will be updated during the budgeting process if actual amounts come in
lower /higher than the estimates.
— Accrued Vacation & Sick Leave Pay - $320,000 estimated increase based on
future retirement payouts, one third catch and actuals in fiscal year 2014 -2015.
• Non - Personnel Costs - Total increase of approximately $633,000
— City Clerk — $96,000 increase in supplies and services for election year
— Public Works — $250,000 increase in contracted services for new capital projects
and NPDES requirements
— General liabilities - $195,000 increase in premium
— Workers' Compensation - $16,000 increase in premium
— Equipment Replacement - $56,000 increase from new equipment placed into
service
7
Table 4 - General Fund f errditures by De artmetrt
Staff will be presenting departmental expenditure requests along with revenue options for
consideration at this upcoming Strategic Planning Session.
Adopted FY
Projected FY
2014 -2015
2015 -2016
Variances
City Attorney
449,000
488,000
39,000
City Clerk
340,700
439,300
98,600
City Council
271,300
265,700
(5,600)
City Manager
937,200
1,010,900
73,700
City Treasurer
309,000
307,500
(1,500)
Finance
1, 844,500
1,853,700
9,200
Fire
14,160,100
14,542,500
382,400
Human Resources
745,200
788,600
43,400
Library
2,188,400
2,003,700
(184,700)
Planning & Building Safety
2,685,100
2,674,700
(10,400)
Police & Information Systems
18,792,300
19,434,500
642,200
Communication Center
1,398,300
1,413,300
15,000
Public Works
5,925,600
6,671,000
745,400
Recreation & Parks
5,082,200
5,095,000
12,800
Non-departmental
4,337,800
5,083,700
745,900
Total Operating Budget
59,466,700
62,072,100
2,605,400
Transfer to Economic Uncertainty
750,000
750,000
-
Transfer to CDBG
76,400
70,000
(6,400)
Transfer to Facility Maintenance
350,000
350,000
-
Transfer to Equipment Replacement
200,000
200,000
-
Transfer to CIP
3,200,000
-
(3,200,000)
Total Transfer -out 1
4,576,400
1,370,000
(3,206,400)
Grand Total 1
64,043,100
63,442,100
(601,000)
Staff will be presenting departmental expenditure requests along with revenue options for
consideration at this upcoming Strategic Planning Session.