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Sunnyvale Budget 2011-2012 Presentation
- 1. June 2, 2011 FY 2011/12 Budget Workshop
- 2. - J. K. Galbraith
- 5. Citywide Expenditures by Fund Total Expenditures $265.9M
- 6. Citywide Overview 2001 2011 Increase/ Decrease City Population 133,215 141,099 6% Operations Expenditures $157.9M $222M 41% Total Full-time Employees 937 845 -10%
- 8. Total Expenditures $129.7M General Fund Overview
- 10. #1 Increased Pension Contributions
- 12. #2 Public Safety Salary Assumptions
- 15. #3 Miscellaneous Employee Compensation Assumption
- 18. *In FY 2004/05, Property Tax increased due to a State revenue shift between the VLF and Property Tax. In order to compare the true growth of property tax, the shift is not reflected in this table. Expenditures Grew Faster than Revenues Fiscal Year Property Tax Sales Tax Compensation 2000/01 $20.4M $36.3M $58.5M 2001/02 $22.8M $25.8M $62.6M 2002/03 $23.9M $22.8M $70.2M 2003/04 $23.6M $23.5M $73.2M 2004/05* $23.9M $24.9M $80.1M 2005/06 $25.9M $28.4M $86.6M 2006/07 $27.0M $30.9M $88.8M 2007/08 $29.3M $29.7M $90.9M 2008/09 $31.8M $25.1M $97.2M 2009/10 $32.7M $25.4M $96.2M 2010/11 $31.0M $27.3M $97.7M
- 21. Level 1 Cost Savings Department Target Proposed Savings Office of the City Attorney $7,781 $7,884 Human Resources $15,030 $168,109 Community Development $22,259 $25,240 Finance $25,094 $26,125 Information Technology $26,699 $26,912 Office of the City Manager $48,212 $219,679 Library and Community Services $68,705 $113,199 Public Works $80,215 $103,210 Public Safety $306,006 $308,697 Total $600,000 $999,055
- 24. Level 2 Cost Savings Department Cumulative Target Office of the City Attorney $29,179 Human Resources $56,364 Community Development $83,469 Finance $94,104 Information Technology $100,120 Office of the City Manager $180,796 Library and Community Services $257,640 Public Works $300,807 Public Safety $1,147,521 Total $2,250,000
- 25. Budget Stabilization Fund Scenarios
- 27. WPCP Renovation
- 34. Water
- 38. Transportation
- 41. Civic Center
- 64. Budget Supplements Description One time or ongoing Cost Funding Recommendation Guided Neighborhood Bike Routes – First Phase One time $40,000 No Expand Care Management at Senior Center Ongoing Up to $1.5M No Junior Achievement One time $5,000 No Leadership Sunnyvale Funding One time $6,000 Yes Community Event Grant Funding One time $10,000 Yes Neighborhood Grant Funding One time $6,125 Yes 2011 Priority Study Issues Funding One time $855,000 No Pet Parade One time $30,500 No
- 65. End of Slide Show The City of Sunnyvale does not own nor endorse any of the following content on this 3 rd -party application.
Notas del editor
- Revenue recovery began late in FY 2009/10 and accelerated in FY 2010/11. Sales Tax is expected to be up 7% TOT is expected to be up $16% Development-related revenues are expected to be up 29% All great news, but most of this was already programmed into the budget. FY 2010/11 has been better than expected, but we are not expecting this to make a significant change to our revenue baseline. Property Tax is lagging, as it is expected to be down 1% in FY 2010/11; however, recent commercial activity should reduce the impact of the outstanding commercial appeals.
- We are spending more than we are bringing in For the first 10 years of the plan, we are averaging spending $2.4M per year more than we bring in The lowest deficit amount is $560K in FY 2012/2013 Recovery is incorporated into the revenue numbers! This is our structural deficit.
- $265.9M expenditure budget is 3.5% over the FY 2010/11 budget. This is predominantly the result of increased salaries and benefits and the increase in the cost of purchased water. FY 2011/12 is a projects budget year, with the emphasis on existing infrastructure. There were minimal new projects included in the budget, and City facility infrastructure remains unfunded. Utilities rates will increase significantly in FY 2011/12, particularly water rates. This is the result of the large increase to wholesale water rates from SFPUC. There are also significant projects getting underway in the utilities, including the plant project. Many of these are bond-funded infrastructure projects.
- Over the past 11 years, the City’s population has grown 6%, meaning there are more people requiring services. Because operations expenditures have increased at such a rapid pace and exceeded revenue growth, we have fewer employees to provide those services. The increase in operations expenditures is primarily the result of salary and benefit increases.
- General Fund expenditures are $129.7 for FY 2011/12 (not including transfers to other funds) This is an increase of 3.8% ($4.8M) over FY 2010/11 $123.8M operating budget Up 5.7% over FY 2010/11 Rising employee costs; fewer employees Increase to Contingency Reserve of $1.8M
- Pension costs continue to rise The City will spend over $31M for pension costs in FY 2011/12 Unfunded liability up to $148M ($107M last year) Plan only 57% funded (85% last year) CalPERS rates increasing sharply Market losses Demographic study Even with the rate increases, the rates set by CalPERS don’t fully address unfunded liability
- CalPERS rates not high enough; we have been in this position before. 10 years ago when CalPERS had a 0% employer rate, the City was not confident that the 0% contribution rate would last indefinitely as CalPERS had indicated. However, the City did not set any funds aside for future rate increases as it should have. We are in a similar situation now, with CalPERS not charging the rates that it should. We learned our lesson the first time and strongly recommend that we contribute at the higher rate developed with our consulting actuary. This will result in the City spending more that required by CalPERS over the next five years ($5.4M total) Utilizing this higher rate, however, has a number of benefits: There is less rate volatility. To the extent CalPERS “smooths” losses and doesn’t charge what it should charge, rates become more volatile if returns do not hit 7.75% It pays off our unfunded liability; CalPERS rates currently do not do that. Paying off the unfunded liability will lead to lower rates over the long term.
- PSOA/PSMA budgeted increases lower than historical average increases Salary survey leaves City vulnerable Budgeted salary increases: 4% through 2015 3% from 2016-2021 4% from 2022-2031 Historical increases: 4.6% Considers recent concessions 3% contribution + two-tier Ave. budgeted total compensation increase: 4.1% $3.3 million annually – Is this enough?
- Safety salaries and benefits budgeted to average increases $3.3 million a year, but we are not sure if it is enough given the history of salary increases for PSOA If historical increases occur going forward, $194M in additional funds will be needed for Public Safety compensation Based on current projections, it would also exhaust the Budget Stabilization Fund by 2017 For these compensation assumptions to hold, it will be necessary for the salary survey to be modified when the contract expires in 2015, or earlier if possible.
- SMA agreed to concessions in 2011 2% contribution + 2 zero years + two-tier retirement FY 2011/12 Recommended Budget assumes that the other bargaining units will make the same concessions If not, an additional $73 million in compensation over 20 years will be required The Budget Stabilization Fund will be exhausted in 2017 Average increase in salaries and benefits for miscellaneous employees = 2.6% ($1.6M)
- $28M in infrastructure investment has been included in the FY 2011/2012 Recommended Budget This is $28M over 20 years Represents the cost to get the PCI back to 80 and maintain at that level Will not necessarily be used for this purpose Utilizing it for streets maintenance means that other infrastructure needs are not addressed, and there is no other funding set aside for other infrastructure or facilities.
- We are spending more than we are bringing in For the first 10 years of the plan, we are averaging spending $2.4M per year more than we bring in The lowest deficit amount is $560K in FY 2012/2013 Recovery is incorporated into the revenue numbers! This is our structural deficit. Additionally, because our contingency reserve is required to be 20% of operations costs, as operations costs grow, this contingency is required to grow. $9.1M increase over next 10 years.
- To illustrate the point about why we have a structural deficit, this table shows our two biggest revenue sources, Property Tax and Sales Tax, as well as our compensation expenditures Compensation has steadily increased during this time, increasing 67%, while over that same time period due to the cyclical nature of revenues, especially Sales Tax, our two biggest revenues are up 22% The 22% revenue growth is misleading because in 2004/2005, the State shifted revenues between Property Tax (increasing) and the Vehicle License Fee (decreasing by a like amount). In reality, our revenue base did not increase significantly in FY 2004/05 because the increase in Property Tax was offset by a decrease in VLF.
- The structural deficit results in the depletion in the budget stabilization fund over the next 10 years. FY 2009/10: $40M FY 2010/11: $35M FY 2020.21: $1.6M After $0 and significant cuts required Issue in back 10 exacerbated by the expiration of two loan repayments to the General Fund Solid Waste: $4.7M (completed in FY 2022/23) RDA: $11.5M (completed in FY 2027/28)
- Service level reductions - $500,000 programmed into the budget. City Manager gave departments total target of $600,000 $500,000 in cuts results in the Budget Stabilization Fund being exhausted in 2021 Departments to date have submitted nearly $1M in cuts If these additional cuts are implemented, it results in a two year extension to the Budget Stabilization Fund, delaying its exhaustion until 2023.
- This slide shows each department’s target and the amount they have committed to saving. So far, the cuts are $400,000 greater than the target.
- Even with the cuts that have been planned, the back 10 years are very problematic; drastic cuts will be required. The reason for this is, in addition to the structural deficit, two large sources of revenues expire during the back 10 years The loan repayment from the Solid Waste Fund, $4.7M per year at that time, ends in FY 2022/23 The loan repayment from the Redevelopment Agency, $11.5M per year at the time, ends in FY 2027/28 If we make additional cuts now, it will mean the cuts later will be less drastic.
- An additional set of cost savings has been requested These Tier 2 savings, which are $1.25M in addition to the $1M already proposed, for a total of $2.25M, make a significant difference to the General Fund’s position going forward if implemented Budget Stabilization Fund is not exhausted until 2028 when the RDA loan runs out In FY 2021, the BSF ends $26.4M Current plan is $1.6M This is contingent on all other budgetary assumptions holding, most importantly the modification to the DPS salary survey.
- This table shows the department targets for the Tier 2 cost savings, which total $2.25M $1M of this savings already achieved
- This graph shows two Budget Stabilization Fund scenarios The blue bars show the BSF if the Tier 2 savings are implemented. As you can see, the BSF is healthy well past the first 10 years of the plan in this scenario The orange bars show the BSF with the Tier 2 savings implemented but also if historical salary increases occur for Safety. As these bars show, even with significant cost savings measures, if the Safety salary survey is not modified and historical salary increases come to fruition, the Budget Stabilization Fund will go negative within the first 10 years of the plan.
- WPCP Strategic Infrastructure Plan (SIP) complete Peer review also complete 1 st step: New Head-Works and Primary Treatment Facilities $58M design and construction Continue manage the gap projects Funded by utility revenue bonds
- Water Supply and Distribution $42.2 million over 20 years Storage, pipes, and wells $17.8 million in Water Revenue Bonds Wastewater Collection System $36.1 million over 20 years Pipe, trunk line, and other infrastructure $22.6 million in Wastewater Revenue Bonds Solid Waste Management System Addresses maintenance/regulatory issues $30 million placeholder for SMaRT replacement FY 2023/24
- Three major federally funded projects underway Mathilda Avenue Bridge Scheduled completion in January 2012 Calabazas Creek Bridge Expected completion in 2014 Fair Oaks Bridge Expected completion in 2015
- Baylands- Deteriorating Play Structures
- Las Palmas Tennis Center – Roof Beam at Locker Rooms
- The Sunnyvale Senior Center (where this meeting is located), opened in July 2003. They have huge numbers of programs for Seniors. They also have an on-site fitness center, a reading room, and a billiards room… It’s located right here next to the Community Center (open 9 to 4:30 during the week) To take advantage of the senior center, you have to be 50 years or older…
- “ Unfinished” JWC Greenbelt
- Washington Park Pool C onstructed in 1955