HomeMy WebLinkAboutSupplemental Questions from Robert Goldberg1
Gloria Harper
From:Robert Goldberg <rgoldberg@live.com>
Sent:Thursday, May 28, 2020 8:40 AM
To:Thomas Moore; Schelly Sustarsic; Mike Varipapa; Sandra Massa-Lavitt; Joe Kalmick
Cc:Jill Ingram; Gloria Harper; Steve Myrter; Kelly Telford; Phil Gonshak; Charles M. Kelly;
Jeannette Andruss
Subject:External Email : Questions and Comments for Today's Budget Workshop
Attachments:Budget Questions.20.21.Pre WS.doc; West Comm Economics.xls
Dear Council and Staff,
Please find attached "Part 1" of my questions and comments on the budget through page 115. I have also
attached one referenced spreadsheet regarding West Comm's budget. I hope to finish "Part 2"by noon today.
Thank you for your consideration and service,
Robert Goldberg
CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you
recognize the sender and know the content is safe.
1
Comments & Questions from Robert Goldberg, 5/28/20
[Part 1]
Budget Message
The omitted Budget Message usually states whether anticipated employee raises have
been included in budget calculation of salaries and benefits. This is a very important
assumption to know, and is at the Council’s discretion to agree with or direct otherwise.
Our full-time salaries are pegged to the change in our local CPI from April-to-April,
which came in this year at 0.7%. The employment contracts that Council approved last
December provide a minimum of a 2% raise on 7/1/20 for the SB Mid-Management &
Confidential Employees Asso., the OC Employees Asso (OCEA), and the SB
Supervisors & Professionals Asso. (SBSPA). In February 2020, the Council similarly
agreed to a minimum of a 2% raise for the SB Marine Safety Management Asso.
(SBMSMA),
The police contracts (PMA &POA) expire on 6/30/20 so any pay raise this coming July
is subject to negotiations. While the individual contracts with our Executive Management
employees have no expiration clauses, the Council has not yet committed to granting
them any future pay raises.
Police and Executive salaries easily represent over half of the full-time salary total of
$11.5 million (see page 28) and CalPERS cost of $4.4 million. Therefore, the size of any
July raise for these employees is not inconsequential when a proposed budget has a
surplus of $0.
Was a July pay raise of 2% for Police and Executive’s included in the budget figures?
If so, what is the contribution of these raises to the total cost of Personnel Services of
$22.0 million shown on page 28?
Summary of Projected Fund Balances
P.14-15
This new addition provides a useful overview. However, I misinterpreted two aspects of
it that were quite material:
1) The column for Proposed Operating Expenditures for the General Fund (first line)
does not include operational transfers to other funds such as the Tidelands and
the St Lighting District. Without knowing this, in my first viewing of the chart, I
compared this figure with Total Proposed Revenues leading me to think that we
had an operating surplus of $1.4 million.
2) Also, in my first viewing, I assumed that Fund Balances referred to cash. This led
me to wonder why we needed to raise water rates if the Water Cap Fund has
almost $22 M? And why we’re not going to purchase any new vehicles if the
2
Vehicle Replacement Fund has over $1 M? Much later, I realized that for these
funds, this chart was displaying total net asset values which include pipes,
pumps, and vehicles.
Recommendation: Display cash balances only for all funds
Regarding the Vehicle Replacement Fund:
What is the source of the $50,000 in proposed revenue?
Revenue Detail
P.16
Sales and BB Tax: The State released actual revenue figures for the Jan-March quarter
last Thursday. These showed our “regular” Bradley-Burns 1% sales tax dropped 22.5%
from the same quarter last year.
With these new figures now available, do we have revisions for projected regular
sales and BB tax revenue from HdL?
Barrel Tax: The revenue estimate for FY 20-21 is the same as for FY 19-20. However,
with the price of oil down 50% over the last year, our barrel tax rate, which is adjusted
annually, will be lowered significantly on July 1st.
Do we have an estimate for how much the barrel tax rate will drop July 1st?
Inmate Fees from other Agencies: This is primarily revenue from the new contract with
the US Marshals Service. The revenue from this contract was increasing in the first half
of FY 19-20 to a contract high of $22,984 in December (last month that I requested via
PRA 20-60) with an average daily census of 7 beds. At say, $22,000 per month, the
contract would provide $264,000 in revenue per year. Only $200,000 is estimated for
FY 20-21.
Did our US Marshals bed census drop because of COVID?
If not, are there other reasons to expect an average census of less than 7 in FY 20 -21?
P.18
Liability Insurance Reimbursement:
Is the revenue of $107,030 in FY 18-19 and $1,447,800 in FY 19-20 related to
the pier fire? If so, why isn’t this being shown as Tidelands Fund revenue?
3
P.19
St Lighting District: Transfer In-Operations from the General Fund is budgeted at
$70,100. However, the required GF subsidy presented by the Engineer’s Annual Levy
Report to be adopted by Council on 5/26/20 is $10,000 less ($60,098).
Why is an extra $10,000 being transferred from the GF?
P.20
Insurance Reimbursement: This account line (034-000-30969) for the pier fire has been
deleted. Last year’s budget gave a FY 18-19 Estimated of $5,955,500.
How much reimbursement have we received for the pier fire?
Where is this recorded in the budget?
How much more do we expect to receive and when?
General Fund - Fund Balance
P.33
Classifications of Fund Balance: “Assigned for: Other” shows a proposed FY 20-21
year-end balance of $1,112,424. In past budgets, there was not “Other” category, but
rather "Compensated Absences” of about the same amount.
Is “Other” primarily compensated absences?
Personnel Summary
P.34
This table is a new and welcome addition to the budget as it provides perspe ctive and
context with two years of historical staffing levels.
Request: Please add classification (job) detail to the listing of part -time employees.
City Manager: The table on page 34 shows a proposed increase in full-time Management
Analysts from 1.00 to 2.00. The addition of this new positon appears to be an upgrade of
an existing 0.73 part-time position.
Which is total cost in salary and benefits for this upgrade?
Police: The table on page 34 shows 4 Police Corporals for the Proposed FY 20 -21
Budget. However, the Position Allocation Plan (PAP) on page 231 shows the Proposed
FY 20-21 to have a total of 5-- one assigned to EOC and four assigned to Field Services.
If the PAP is correct, then the total number of sworn police officers would rise to 39.
Which is correct?
4
P.35
Public Works: The table on page 35 shows 1.00 Associate Engineer and 1.00 Assistant
Engineer for the Proposed FY 20-21 Budget. However, the Position Allocation Plan (PAP)
on page 232 shows a Proposed FY 20-21 of 2.00 Associate Engineers and zero Assistant
Which is correct?
The table on page 35 shows 6.00 Sr. Maintenance Workers for the Proposed FY 20 -21
Budget. However, the Position Allocation Plan (PAP) on page 232 shows a total of only
5.0 for the Proposed FY 20-21.
Which is correct?
Part-Time Employees-- Public Works: The table on page 35 shows 6.75 for the Proposed
FY 20-21 Budget. However, the Position Allocation Plan (PAP) on page 232 shows a
Proposed FY 20-21 of only 6.05 even after including a 0.75 Intern position (not labelled as
part-time) and the fractional portion of 4.46 Water Operator (0.46).
Which total is correct, 6.75 or 6.05?
If we employee part-time Water Operators, why isn’t “Water Operator (Part-time)”
listed as a separate line in the PAP?
City Manager Department
P.41
Program: City Manager: In the “Explanation of Significant Accounts”, the listing for
Contract Professional Svcs has been dropped.
Can this please be restored with a listing of the anticipated contracts that total to
$35,000?
P. 44
Program: Information Systems: The “Explanation of Significant Accounts” for “Office and
Technology Resources” lists six separate “upgrade,” “implementation,” “cleanup,” and
“replacement” projects to be completed. This listing is exactly the same as it was in the
FY 19-20 budget.
Have none of these six projects been completed?
P. 45
Program: Refuse: The proposed budget is $1,184,500 even though the actual for FY 18 -
19 was $1,236,387 and the estimated for FY 19 -20 is higher at $1,255,700.
Why is Refuse being budgeted at a level that is $50-70,000 less than our
experience over the last two years?
5
City Clerk
P.51
Program: Elections: The “Explanation of Significant Accounts” for “Special Departmental”
has a new listing of “MCA Direct annual services.”
What are these services and their cost?
Non-Departmental
P.57
Expenditures By Program: For “Non-Departmental -019,” the Proposed FY 20-21
Budget amount for “Maintenance and Operations” of $576,300 is $75,000 higher than
source amount on page 58 of $501,300.
Is the higher amount on page 57 incorrect?
P.58
Program: Non-Departmental: The proposed budget has $755,900 for “Medical Insurance.”
This insurance cost is for our current and future retirees. The cost of medical insurance
for current employees is budgeted in each operating department.
Based on our most recent annual actuarial report, I believe the budgeted amount should
be $619,103, or $136,833 lower.
The higher budgeted figure results from the City’s decision to make a direct payment into
our “OPEB” trust fund at CalPERS for what the actuaries call the "implicit subsidy" of our
medical insurance rates for retirees by inclusion of younger and healthier employees in
our group plans. Consequently, the medical insurance rates that we pay for current
employees is a bit higher than it would have been otherwise, and the rates for retirees is a
bit lower. The dollar value of the “bit” is the implicit subsidy.
Under accounting rules that I think started just a few years ago, actuaries must compute
this subsidy and show it as a “contribution” to the cost of our retiree health care.
However, this “contribution” is not one that we have to pay directly, because we pay for
this subsidy automatically through higher medical insurance rates for our current
employees. Therefore, it is not actuarially necessary to pay for the subsidy twice by
directly sending (contributing) the subsidy amount to our OPEB trust fund every year.
This is what staff have done in recent years, and have budgeted to do again this year. I
do not fault them given the subtlety and complexity of the implicit subsidy concept. No
harm has been done as the net result has been that our percent “unfunded liability” for
future health costs has dropped more rapidly than it would have otherwise. However, it
is not necessary to continue effectively “over paying” our OPEB trust fund every year,
especially if doing so results in a $0 surplus as presented this year.
6
Recommendation: Reduce the budgeted amount for “Medical Insurance” to
$619,103. [Note: I emailed this recommendation to our Finance Director
Wednesday morning for her review and comment.]
Police Department
P.71-72
Program: Parking Enforcement: The listing of Contract Professionals on page 72 includes
Dixon Resources. Last July, the Council approved a $45,000 one -year contract with
Dixon to provide “on-call” parking support services. Subsequently, we have been invoiced
an average of just over $2500/month (through at least March).
The contract expires on June 30, 2020. However, the amount in the proposed budget for
Contract Professional on page 71 of $109,000 is the same as the estimated actual for FY
19-20. This implies that staff plans to present Dixon’s contract to Council for renewal in
the near future, and assumes that Council will concur. By budgeting funds now for this
contract, the Financial Impact section of that future staff report will likely state “adequate
funding is available in the adopted budget.”
Recommendation: As an alternative, do not include funding for Dixon in the
proposed budget. This should allow reducing the amount for Contract Profession
by at least $30,000 (12 X $2500). Given a budget with $0 surplus, doing so will
allow the Council to presently consider other possible uses for this money. If in the
future, the Council is persuaded to renew the contract, a budget amendment can
be done if necessary.
P.73
Program: West Comm: The proposed cost for West Comm is unchanged from FY 19 -20.
My review of past West Comm budgets and current labor agreements indicates that we
should anticipate a cost rise of 3% (see attached spreadsheet). This cost rise is driven by
labor agreements that guarantee a 2% pay raise this July and rising health care and
pension costs. Unfortunately, the adoption of the new budget by West Comm has been
delayed by the virus.
Recommendation: Increase the proposed budget by $26,000 to $889,000.
Community Development Department
P.90
Program: Planning: The listing of Contract Professionals on bottom of page 90 does not
include OfficeTeam (temporary services) even though this Planning account has been
regularly debited for a temp Administrative Assistant since June 2019. The running total
from July 2019 through March (last available warrant) is over $14,000.
7
There are two reasons that lead me to believe that use of this temporary em ployee will
continue in FY 20-21: 1) The Position Allocation Plan on page 231 indicates that
Planning’s full-time Executive Assistant position is unfunded. 2) The Council approved an
$80,000 one-year contract with OfficeTeam on 4/27/20.
Why isn’t OfficeTeam included in the listing of Contract Professionals?
The proposed budget for Contract Professional is $59,000 which is significantly less than
the estimated for FY 19-20 ($80.800) and the actual for FY18-19 ($93,870). The $59,000
proposed budget seems to insufficient to cover costs of even two of the three listed
consultative projects. The first, administration of our Community Block Grant program for
LW bathrooms, is done by Civic Stone at an annual cost of $60,000. This contract runs
through the end of FY 20-21. The second listed project is the update of our Housing
Element. The deadline for certification by the State is October 2021. Unless this deadline
is pushed back by the State, the bulk of the work on this very controversial issue will be
done in FY 20-21. At the budget workshops last year, Ms. Beatley estimated that the full
contract cost to update the Housing Element would be about $80,000. However, only a
small portion of this was funded by in FY 19-20. A one-year contract with the consultant
(JHD Planning) for $10,000 expired at the end of April. In summary, I would estimate that
Planning Contract Professional would need $60,000 for Civic Stone, another $70,000 for
JHD Planning, plus, say, $15,000 for Office Team. This totals $145,000, more than
$85,000 over the proposed budget.
Has staff been told by the State Housing Department that the Housing Element
deadline has been postponed?
If not, how is staff planning on paying for consultant work on the Housing Element,
and the use of temporary administrative staff if the Contract Pro budget remains at
$59,000?
P.91
Program: Building and Code Enforcement: The listing of Contract Professionals on
bottom of page 91 includes “code enforcement.” My understanding was that we have
been doing all code enforcement in-house since about April 2019.
Is this correct? If so, why is code enforcement still listed as a consultative service?
The proposed budget for Contract Professional is $40,000, twice what typically is
budgeted ($20,000).
Why was the budget amount doubled?
P.93
Program: Special Projects:
What is the budgeted $60,000 in “Plan Archival” going to be spent on?
8
Public Works Department
P.100
Program: Engineering: The listing of Contract Professionals on page 100 does not include
OfficeTeam (temporary services) even though this Engineering account has been
regularly debited for a temp Administrative Assistant since June 2019. The running total
from July 2019 through March (last available warrant) is over $14,000. This represents
almost half of the $30,000 estimated to have been spent in FY 19-20 on Contract
Professionals.
There are two reasons that lead me to believe that use of this temporary employee will
continue in FY 20-21: 1) The Position Allocation Plan on page 232 indicates that
Engineering has an unfilled Executive Assistant position. 2) The Council approved an
$80,000 one-year contract with OfficeTeam on 4/27/20.
Will Engineering be continuing to use a temporary Administrative Assistant in FY 20-21?
If so, shouldn’t it be included in the listing of Contract Professionals?
P.101
Program: Storm Drains: The proposed budget for Part-Time is $17,500 vs. an estimated
$2000 for FY 19-20, and an actual of $2475 for FY 18-19. Of note is that my comparison
of the proposed Position Allocation Plan on page 232 to the one from FY 19-20 does not
show any proposed increase in fractional part-time positions (full-time equivalents).
Please explain why $17,500 is being requested for Part-Time employees?
Why is this increase not reflected in the Position Allocation Plan?
P. 103-104
Program: Street Maintenance: The listing of Contract Professionals on page 104 is
unchanged from last year, yet the proposed budget for Contract Professionals on page
103 is $909,500 vs. $786,000 in the Amended FY 19-20 Budget. While two large
contracts were rebid last year (Main St pressure washing in December and tree -trimming
in January), only one required a budget amendment ($26,000), and that amendment is
included in the $786,000 for FY 19-20.
The $786,000 in the amended FY 19-20 Budget also included two “one-time” projects.
The first was our 2020 Pavement Management Plan. Nichols Engineering was given a
contract of $21,300 to perform this work last September. I would expect their report to be
presented to Council in June. The second project was revising our CEQA traffic impact
guidelines. Iteris was awarded a $36,000 contract for this by Council on 4/13/20 (no
budget amendment needed). That project should be nearing completion with the
guidelines having been presented to the Planning Commission at its meeting on May 18th.
9
Subtracting those two “one-time” contracts, only about $730,000 would have otherwise
been needed to be budgeted for FY 19-20 for ongoing contracts. The request for FY 20-
21 is $179,500 (25%) higher, than this amount.
Please provide an itemized listing of each contract amount that was summed to
generate the proposed $909,500. This listing should already be available given
staff’s directive to follow “zero-based” budgeting principles.
The proposed FY 20-21 budget for Street Sweeping is $180,000. This is based on the full
cost of the new contract approved by Council in October 2019 for an amount not to
exceed $174,416 annually. However, historically, 25% of street sweeping costs have
been charged to the Waste Management Fund (005), and age 47 lists “street sweeping”
under the list of contractors paid for by this Fund. The Waste Management Fund derives
from a $10,000/month payment to the City from Republic Industries that must be used for
recycling purposes.
Why is the full amount of the Street Sweeping contract proposed to be funded here
by the General Fund?
P.106
Program: Building Maintenance
The “Explanation of Significant Accounts” for Contract Pro Services was truncated to only
one line ending in a comma.
Please provide the full listing in future budget drafts.
P.114
Fund: Water Capital Improvement
FY 19-20’s budget included a “Fund Balance and Cash Analysis” at the bottom of the
page. Given that much of the Fund Balance was due to capital investments (pipes,
pumps), it was very informative to see the cash balances on the budget appropriation
page. The new “Summary of Projected Fund Balances” on pages 14-15 shows the total of
capital + cash. Thus, cash balance information has been dropped out of the budget.
Please restore at least the “Remaining Cash Balance” analysis to this page.
P.114
Fund: Vehicle Replacement
Please restore at least the “Remaining Cash Balance” analysis to this page.
[Further comments to follow]
West Comm Budget Forecast
Expenditures FY 19-20 West
Comm Budget
My Projected
FY 20-21 Comments
Reg Salaries $1,403,834 $1,431,911 2% Increase 7/20 by Contract
Overtime $88,125 $89,888 2% Increase 7/20 by Contract
Fringe Benefits $950,527 $1,007,559 PERS and Medical-- went up 6%+ in FY 19-20.
Medical to rise by same $1200/employee per
contract in FY 20-21. PERS normal rate and
UAL to rise by about same amounts as in FY
19-20 also. Therefore, use +6% for FY 20-21
Temporary Services $19,207 $19,207 Assume no increase
$2,461,693 $2,548,564
Supplies/Services $391,474 $391,474 Assume no increase
CAD/800 mHz Replacement
Fund Charge
$171,000 $171,000 Should not change significantly. $171,000 is
fixed contribution to capital reserves
Total Expenditures $3,024,167 $3,111,038 Does not count Expenditure of Equipment
Reserves
Revenues FY 19-20
Projected FY 20-
21 Comments
City of Los Al $694,623 $715,820 24.4%
City of Seal Beach $862,586 $888,908 30.3%
City of Cypress $1,289,608 $1,328,961 45.3%
$2,846,817 $2,933,689
Investment Earnings $25,000 $25,000 Do not expect increase due to drop in
interest rates
State Reimbursements $21,849 $21,849
OC Parks $130,500 $130,500
Total Revenues $3,024,166 $3,111,038 Does not count Revenue from Equipment
Reserves
Seal Beach Increase 3.05%
Revised 7/14/19
The total of these two sources dropped
slightly in FY 19-20. Therefore, expect no
increase in FY 20-21