Item 8-A

Council Meeting: October 28, 2003 Santa Monica, California

TO: Mayor and City Council

Chairperson and Redevelopment Agency Members

Chairperson and Parking Authority Members

FROM: City Staff

SUBJECT: Adoption of Fiscal 2002-03 Year-End Budget and Fiscal Year 2003-04 Budget Changes; and Resolution Establishing Various New Classifications and Salary Rates.

Introduction

This report recommends Council approval of final year-end budget changes for FY 2002-03 and changes necessary to further implement the FY 2003-04 budget.

Fiscal Year 2002-2003

1. Previously Approved Revisions to the FY 2002-03 Revenue & Expenditure Budgets

Details of previously approved revenue and expenditure budget changes that occurred since January 1, 2003 are listed at Exhibit A1-4. Changes approved for the period of July 1, 2002 through December 31, 2002 were reported to Council as part of the Mid-Year Budget Report.

2. Proposed Budget Changes

The proposed budget changes to the FY 2002-03 Revised Budget are described in Exhibit B1. Additional year-end budget changes, having no net impact on the budget, necessary to ensure that departmental budgets are balanced to the major account group (Salaries and Wages, Supplies and Expenses, and Capital Outlay) appropriation level within a department by fund, are indicated at Exhibit B2.

The FY 2002-03 budget changes detailed at Exhibit B1 recognize actual expenditures incurred prior to June 30, 2003. The Exhibit includes appropriation requests for projects that have been previously approved but not funded, such as the purchase and installation of citywide parking meters and the acquisition of parking structures 1-6. Also included are technical adjustments to the Wastewater and Big Blue Bus Funds for full funding of existing capital improvement projects. All these changes will be reported in conjunction with submission of the City's Comprehensive Annual Financial Report (CAFR) for FY 2002-03 in December 2003.

3. Financial Outlook

The City is in the process of closing FY2002-03. Conrad and Associates, in their first audit engagement with the City, is conducting the FY2002-03 audit. The audit will identify certain one-time accounting adjustments that will increase fund balance. Staff anticipates savings from efficiencies and economies undertaken in the course of FY2002-03. These results will likely exceed one-time savings and revenue realization identified last year.

There remains great uncertainty regarding measures that the new governor and the State legislature will propose to correct deficiencies in the budget for California’s current fiscal year, as well as strategies to return the State to responsible fiscal practices. More information about the State’ fiscal outlook and the City’s financial position should be available by January, when Council considers the Mid-Year 2003-04 Budget. At that time, staff will review revenue realities, community priorities and the adequacy of the proposed financial plan for FY2004-05.

Fiscal Year 2003-2004

1. Proposed Budget Changes

Various FY 2003-04 budget changes, detailed at Exhibit C, are proposed. These changes are necessary to reflect information not available when the City's budget was adopted in June 2003, and to make technical changes and corrections necessary for further budget implementation. The changes are consistent with the goals and objectives outlined in the FY 2003-04 Adopted Budget.

The FY 2003-04 General Fund budget changes detailed at Exhibit C result in the projected General Fund June 30, 2004 balance as shown below:

Adopted

FY 2003-04 Budget

Recommended Changes *

Revised

FY 2003-04

Budget

Estimated

Actual

FY 2003-04

6/30/03 Estimated

Actual Fund Balance

$16,700,000

$ -0-

$ 16,700,000

Plus Revenues

170,765,565

155,792

170,921,357

Less Expenditures

174,716,433

477,224

175,193,657

Balance Sheet Transfers

4,350,868

10,000

4,360,868

Use of FY2001/02 Savings

$311,432

06/30/04 Budgeted

Fund Balance

$17,100,000

($311,432)

$ 16,788,568

$ 17,100,000

*Significant expenditure appropriations include improvements to the permit processing center and code enforcement office, reclassification of grant funds, purchase of new software programs plus, ADA improvements and fiber optic network connections at the Santa Monica Swim Center.

Budget changes associated with other funds detailed at Exhibit C do not significantly change the projected June 30, 2004 fund balances for those funds as presented in the Adopted City Budget for FY 2003-04.

2. Personnel Actions

Included at Exhibit D1 is a resolution revising salaries for various positions. These salary changes result from an analysis of similar positions in comparable cities and internal equity factors. Included at Exhibit D2 is a listing of position and classification changes, which have been reviewed and approved by the City Manager, Human Resources Director and Personnel Board. Costs associated with these changes will be absorbed and will not require budget changes.

Recommendations

It is recommended that:

a) The City Council, Redevelopment Agency and Parking Authority approve the budget changes detailed in Exhibits B1-2 and C; and

b) The City Council adopt Exhibit D1 establishing various new classifications and salary rates

Prepared by: Susan E. McCarthy, City Manager

Gordon Anderson, Assistant City Manager

Mona Miyasato, Assistant to the City Manager – Management Services

Steve Stark, Director of Finance

Janet Shelton, Budget Manager

Kathy Chang, Principal Budget Analyst

Annette Morales, Senior Budget Analyst

Prema Krishnan, Senior Budget Analyst