Meeting Date: February 27, 2003 Budgeted: N/A
Program/Line Item No.: N/A
Staff Contact: Rick Dickhaut Cost Estimate: N/A
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A
SUMMARY: Annually, the District considers its financial position after the end of the second fiscal quarter. District staff has reviewed income and spending patterns since July and determined that adjustment of the budget developed last spring and adopted June 17, 2002 is required. The tables below summarize the proposed budget changes:
RECOMMENDATION: Following presentation by District staff and the public hearing, adopt the proposed mid-year budget adjustment for Fiscal Year 2002-2003.
IMPACT OF STAFF AND RESOURCES: The changes discussed in the background section relate only to current District activities, including funding required this year for strategic initiative projects already in progress. Future funding that will be required for strategic initiatives approved by the Board will be addressed during the 2003-2004 budget process.
PRIOR BOARD ACTION: The Board adopted the original Fiscal Year 2002-2003 budget on June 17, 2002. The Administrative Committee reviewed the proposed changes on January 21 and February 18, 2003. The Board considered the mid-year adjustment at its January 30, 2002 meeting, but deferred the matter to the February meeting.
BACKGROUND: The paragraphs below summarize significant changes to the annual budget and fund balances.
The District Board adopted the annual budget for Fiscal Year 2002-2003 on June 17, 2002. Revenues anticipated for collection in the current year totaled $4,026,700. In addition to the budgeted revenues, approximately $1,457,400 was to be utilized from prior-year fund balances to pay the $5,484,100 in planned expenditures. As of December 31, 2002, actual revenue collections totaled $1,997,915 or about 48 percent of the budget amount. District staff has analyzed the revenue activity for the first six months of the fiscal year, as well as changes in activities scheduled for the second half of the fiscal year and recommends that various adjustments to the revenue portion of the budget be made as discussed below.
As of December 31, 2002, the District has received almost $540,000 in property taxes, which is about 62 percent of the budgeted amount. Based on these collections, the budget for property tax revenue was increased by $75,000. Interest rates have decreased since the budget was adopted resulting in a projected reduction of $20,000 in interest revenue for the year. User fees collected for the first six months of the fiscal year exceeded expectations by 10 percent. It is anticipated that collections for the fiscal year will exceed the budgeted amount by $65,000. Other revenue adjustments include an increase of $18,500 in project reimbursements for reimbursable projects that have been increased on the expenditure side of the budget. The cumulative effect of the above adjustments is a net increase of $138,500 in projected revenues for Fiscal Year 2002-2003.
The original budget envisioned expenditures of $5,484,100 in the fiscal year ending June 30, 2003. As of December 31, 2002, actual expenditures totaled $1,749,525 or approximately 32 percent of the annual budget.
A review of the personnel portion of the 2002-2003 budget indicated that no changes to the budgeted amounts are required. The supplies and services portion of the budget was increased by $15,600 due to additional computer hardware and software requirements for District wide IT support. This increase is due to the need to acquire additional equipment to create a secure and stable network, backup redundancy and additional costs incurred for switching to a new local Internet provider.
Fixed asset expenditures have been increased by $5,500. Of this amount, $3,000 is for replacement of the laptop computer used for Board presentations. The additional amount of $2,500 is required to complete purchases of three items included in the current budget that cost more than the amount originally budgeted.
The Aother@ expense category includes annual accruals for the Flood and Drought Reserve, Capital Equipment Reserve, election expense, annual reimbursement of the capital cost of the office building and the contingency. The increase of $1,000, which is shown in the table above in the Aother@ category, reflects an adjustment to the contingency based on the increase in total expenditures.
Various adjustments were required to program expenses. Major increases include $51,000 to implement Ordinance No. 105 and $397,600 that was added to the budget as a placeholder for the sediment control and intake retrofit project at Sleepy Hollow. These amounts were offset by numerous reductions to project costs such as $200,000 related to the Seaside Groundwater Management Plan, $155,000 for the strategic initiative to revise the water permit process, $25,000 for computer programming to improve customer service and $40,000 for implementing demand management ordinances. These funds will not be expended in this fiscal year but will be required in the Fiscal Year 2003-2004 budget. The net amount of all adjustments resulted in a net increase to program expenses in the amount of $5,300. It is anticipated that actual expenditures will be even less than the amended budgeted amounts if prior year’s patterns prevail.
Changes in Fund Balances
Actual fund balances, as reported in the draft annual audit report for the Fiscal Year ending June 30, 2002, were $4,799,636, which is approximately $24,000 less than projected at the time the budget for 2002-2003 was prepared. These actual fund balances have been incorporated into this adjustment.
Exhibit 12-A consists of amended pages in the adopted budget that will be distributed to Monterey County and other holders of the original budget following Board approval.