ITEM:

PUBLIC HEARINGS

 

15.

CONSIDER ADOPTION OF MID-YEAR FISCAL YEAR 2011-2012 BUDGET ADJUSTMENT

 

Meeting Date:

February 23, 2012

Budgeted: 

N/A

 

From:

David J. Stoldt,

Program/

N/A

 

General Manager

Line Item No.:

 

Prepared By:

Suresh Prasad

Cost Estimate:

N/A

 

General Counsel Review:  N/A

Committee Recommendation:  N/A

CEQA Compliance:  N/A

 

SUMMARY:  Annually, the District considers its financial position after the end of the first half of the fiscal year (FY).  District staff has reviewed income and spending patterns since July 1, 2011 through the end of December 31, 2011 and determined that adjustment to the FY 2011-2012 budget is required.  The FY 2011-2012 budget was adopted on June 20, 2011.  Included in the budget adjustment process was a review of staffing levels, supplies, outside services, current work assignments and other factors affecting the current budget.  The tables below summarize the proposed changes to the budget:

 

 

As the revenue and expenditure tables indicate, net revenue decreases are $1,418,100 and net expenditure decreases are $1,316,200 resulting in an increase of $101,900 in the budgeted use of reserves and line of credit proceeds from $1,747,300 to $1,849,200.  Detailed information regarding the proposed changes, as well as their effect on general operating reserves, is detailed in the background section of this report.

 

RECOMMENDATION:  Following a presentation by District staff and a public hearing, staff recommends adoption of the proposed mid-year budget adjustment for FY 2011-2012.

 

BACKGROUND:  The Board of Directors adopted the original FY 2011-2012 budget on June 20, 2011.  The paragraphs below summarize the original budget, proposed mid-year adjustments to the budget and projected general operating reserves.

 

Revenues

 

The 2011-2012 adopted budget anticipated revenue sources in the amount of $9,674,200, including $727,100 from the Line of Credit Proceeds, $443,900 from the Flood/Drought Reserve and $75,000 from the Litigation Reserve.  It was projected that these revenues would be less than budgeted expenditures resulting in the use of $501,300 from the General Operating Reserve (Fund Balance).  The use of Reserves was attributable to the decision to continue paying for expenditures after the loss of District’s User Fees revenue.  As of December 31, 2012, actual revenue collections totaled $1,481,259 or about 15% of the budgeted amount.  Revenues for the first half of each FY year are historically low because larger portions of the District’s three major revenue sources, user fees, property taxes and reimbursements, are collected during the second half of each FY.  District staff has analyzed the revenue activity for the first six months of the FY, as well as activities scheduled for the second half of the FY, and recommends various adjustments to the revenue portion of the budget as shown in Exhibit 15-A and discussed below:

 

 

 

 

 

 

 

The cumulative effect of these revenue adjustments is a reduction of $1,418,000 in projected revenues for FY 2011-2012.

 

Expenditures

 

The original budget envisioned expenditures of $9,674,200 in the FY ending June 30, 2012. As of December 31, 2011, actual expenditures totaled $2,916,746, or approximately 30% of the budgeted amount.  This low percentage at the mid-way point of the FY is not unusual because project expenditures and fixed asset purchases for the first half of each FY year are historically low.   District staff has analyzed the expenditure activity for the first six months of the FY, as well as activities scheduled for the second half of the FY, and recommends various adjustments to the expenditure portion of the budget as discussed below:

 

 

 

 

 

The cumulative effect of the adjustments to the expenditure side of the budget is a net decrease of $1,316,200 in projected expenditures for FY 2011-2012.  

 

General Operating Reserves

 

The difference of $101,900 in adjustments to revenues and expenditures resulted in the use of line of credit and reserves as follows:

 

Description

Original Budget

Adjustment

Amended Budget

Litigation Reserve

$75,000

$175,000

$250,000

Capital Equipment Reserve

0

4,800

4,800

Flood/Drought Reserve

443,900

0

443,900

General Operating Reserve

501,300

(26,000)

475,300

Sub-total

$1,020,200

$153,800

$1,174,000

Line of Credit

727,100

(51,900)

675,200

Total

$1,747,300

$101,900

$1,849,200

 

The decrease in the use of general operating reserves from $501,300 to $475,300 was made to bring the reserve fund to a balance to zero. The above adjustments will result in an estimated reserve carryover of $344,491 at June 30, 2012 as shown on Exhibit 15-F.  This amount equates to about 4.1% of the new operating budget amount, below the minimum of 5% established by the Board during the 2005-06 budget process.

 

EXHIBITS

15-A    Revenues

15-B    Personnel Costs

15-C    Supplies & Services

15-D    Project Expenditures

15-E    Capital Assets

15-F    Reserves Analysis

 

 

 

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