Claremont City Council

Agenda Report

TO CITY COUNCIL

FROM JEFFREY C PARKER

DATE JANUARY 31 2009

SUBJECT FISCAL YEAR 2008 2010 BUDGET REPORT

SUMMARY

Due to the current national economic situation the City of Claremont is experiencing a
reduction in revenues below projections made during the budget process in the spring of
2008 At this point staff is estimating the City will have a 1 5 million dollar shortfall at the
end of fiscal year 2008 09 and a 2 million dollar shortfall at the end of FY 2009 10 unless
the City acts now to reduce expenditures accordingly This report details the proposed

operational changes to correct the FY 2008 09 budget shortfall and outlines the current
status and remaining gap for FY 2009 10

Staff Recommendation

Staff recommends that the City Council

and the
1 Approve the presented plan to balance the 2008 09 budget appropriate
1 011 000 in onetime unanticipated revenue Attachment A

2 Receive and file the City Manager s draft 2009 10 budget plan which includes
operational reductions benefit reductions and organizational changes
Attachment B

the final 2009 10 to the City

3 Direct the City Manager to bring back budget plan
Council on February 24 2009

ANALYSIS

feeling the impacts of the current economic situation across the

c

The City of Claremont is

country and the world While the City has been fortunate to not suffer as severely from the
foreclosure crisis as some of our neighbors nevertheless Claremont s other key revenue
sources are down Automobile and other sales are down Transient Occupancy Tax paid by

visitors staying at our hotels are down and development has all but stopped

08 09 Shortfall
1 170 000

Tax

FOR CITY COUNCIL AGENDA ITEM

City Council
January 31 2009
Page 2 of4

Staff anticipates these revenues will remain down in similar amounts next fiscal year 09
10 with the addition of a 2 5 increase in operating costs due to normal escalations in
contracts and employee benefits

09 10
Shortfall Revenue TVDe
1 220 000 Sales Tax

Transient Occupancy Tax

80 000
Hotel Tax
100 000 Buildinq Permit Fees
20 000 Development Fees
80 000 Plan Check Fees

The combination of these reductions in revenue and an estimated 500 000 increase in
operational costs come together to produce Claremont s current 1 5M budget shortfall
in FY 2008 09 and a 2M shortfall for FY 2009 10

2008 09
At this time staff anticipates a revenue shortfall of 1 5 million for FY 2008 09 In order to
maintain a balanced budget for FY 2008 09 Attachment A presents the staff recommended
solution for the shortfall

The first section of the table outlines onetime

unanticipated revenue the City received
from grants the state and operational changes that have occurred since the
completion
of the budget

The second section shows the vacancies and associated

savings in leaving current
vacancies unfilled through the remainder of the fiscal year

The final section shows the operational reductions from City departments as well as

categorical cuts for items such as training travel and equipment

Through the implementation of these adjustments the 1 5M budget shortfall can be

resolved

2009 10
Due to the same economic issues that in FY 2008 09
are present including reduced
revenue as well as increasing costs the 2009 10 shortfall is
anticipated 2M Staff has
determined it is not possible to meet this shortfall with
operational reductions alone
Personnel costs will also need to be reduced through some combination of reductions in
benefits and the number of budgeted positions
City Council
January 31 2009
Page 3 of4

The first three sections of Attachment B are similar to Attachment A with some additional
reductions achieved by having a full year of costs to reduce Additionally there is 118 000
from the General Fund Reserves to fully resolve the shortfall

Over the last three weeks the Assistant City Manager and negotiating team have been
meeting with the six
employee associations to brief them the budget situation and
on

provide them with options on how to help reduce the budget beyond the operational cuts
already made by the City Manager

The fourth section shows the benefit reduction recommendations for each of the

employee groups based their responses to the City Manager s request to reduce
on

benefit costs These reductions have not yet been agreed to by the employee
associations The negotiating team will be meeting with the various groups over the
coming weeks to get final concurrence on the proposed reductions

The fifth section shows the groups whose percentage of the cut will need to be
achieved through organizational changes The City Manager will be meeting with
Department Heads to decide what organizational changes will be necessary to reach
the required dollar amount from each group

Once the negotiating team and the associations have come to tentative agreements on the
benefit reductions these benefit reductions will come to the City Council for approval After
the benefit reductions are finalized by council the City
Manager will inform the council of
the organizational changes that will be needed to resolve the shortfall

PUBLIC NOTICE PROCESS

This item has been noticed through the regular agenda notification process Copies are
available at the Hall
public counter the Youth Activity Center the Alexander Hughes
City
Community Center the City website and the Claremont Public Library

ALTERNATIVES TO STAFF RECOMMENDATION

In addition to the staff recommendation there the

are following alternatives

1 Request further information from staff

2 Take no action
City Council
January 31 2009
Page 4 of4

Submitted by Prepared by

P
ffi
Jeffrey C Parker Tony Ramos
v

City Manager Assistant City Manager

Prepared by Prepared by

f M

Adam Pirrie Colin Tudor

Finance Manager Assistant to the City Manager

V CTudor COUNCIL AGENDA STAFF REPORTS Budget Report 1 31 09 doc

Attachments Attachment A FY 2008 09 Budget Plan

Attachment B FY 2009 10 Draft Budget Plan
Attachment A City of Claremont FY 2008 09
Budget Plan

2008 09 Shortfall

1 500 000

Contribution from the General Fund Reserve

Contribution of funds resulting from the receipt of time General Fund

unanticipated one

revenues

Prop 172 Funds were not included in the it was

budget as

anticipated the state would take these funds

which they did not 300 000
Public Works Permits Revenues have exceeded amounts
budgeted by
this amount YTD 27 000
Y FSC Lease The lease with Tri
agreement City was not
included in the budget due to the agreement
being reached after the conclusion of the budget
53 000
Park Ranger Grant Not offset fund cost for
budgeted general park
ranger program 46 000 1 011 000

Grading Plan Check Revenues will exceed amounts this

budgeted by
amount YTD 10 000
Street Rehab Fees Revenues will exceed budgeted amounts by this
amount YTD 317 000
S890 State mandated Claims Not budgeted these are current payments from
the state Fingerprinting and domestic violence
8 000
Padua Hills Theatre Fund Anticipated fund balance in PHT Fund after
Pergola project and transfer of Theatre to
developer 250 000

Remaining Shortfall 489 000

Vacancies
Savings

Receptionist H S 38 000
Maintenance Craftsperson II C S None
Senior Maintenance Assistant PT C S 17 000
Maintenance Assistant PT C S 14 000
Park Ranger PT C S 14 000
Park Ranger PT C S 14 000
Planning Intern CD 12 000

Vacancies Subtotal 109 000

Remaining Shortfall 380 000

Page 1 of 3
Attachment A City of Claremont FY 2008 09
Budget Plan

Operational Reductions
Savings
Administrative Services Operating Budget Savings can be identified in the following
accounts BudQet SavinQs RemaininQ
Program Supplies Reduction in Community Information budget 10 400 6 500 2 013
eliminates time
budgeted one City wide mailing
Legislative Activity Reduction in funding for Council legislative trips 6 500 3 500 3 000
and conferences

Contingency The City Manager maintains a contingency fund 200 000 42 000 158 000
in order to be prepared for unanticipated costs
throughout the year Reduction of this fund may 75 000
require staff to request funding from the Council
for unanticipated costs

Advertising Due to the hiring freeze non essential positions 23 500 12 000 3 985
there is a reduced need for advertising jobs
Personnel Exams Due to the freeze non essential
hiring positions 425
23 11 000 5 544
there is a reduced need for new hire exams

Community Development Operating Budget Savings can be identified in the following

accounts BudQet SavinQs RemaininQ
Nuisance Abatement Based on year to date actuals it is anticipated 43 900 22 000 17 614
sufficient funds remain to meet the need

Contract Services Delays the transfer of plans to electronic format 362 045 58 000 70 054
80 000
project planning has been working on Any large
unanticipated projects will need to be funded by
Council appropriation

Community Services Operating Budget Savings can be identified in the following accounts
BudQet SavinQs RemaininQ
Program Supplies Reduction in Claremont Hills Wilderness Park 33 550 4 000 6 713
tours and reduces ability to replace signage
Contract Services Reduces several contract maintenance services 885 951 34 000 54 710

including painting pressure washing park

repairs Thompson Creek trail plant
servicelrental and reduction in sport field 51 000
maintenance Individual accounts reduced
being
retain sufficient for essential service
funding

Water Reduces the of from 3 198 112

frequency park watering 13 000 104 231
times to twice a week

Page 2 of 3
Attachment A City of Claremont FY 2008 09
Budget Plan
Operational Reductions
Savings
Human Services Operating Budget Savings can be identified in the following accounts

BudQet Savinas RemaininQ

Program Supplies Reduction in Y AC and TAC program supplies 40 285 8 000 14 735
Contract Services Eliminates the of La Verne
University 16 500 16 500 0

Psychological services counseling program

Equipment Maintenance Janitorial cost for Y FSC which is now the 18 200 7 500 6 906 43 000
responsibility of Tri City
Youth Scholarships Grants The proposed savings is the amount historically 36 000 11 000 22 073

remaining in budget at the end of the FY

Meetings Travel Thisexpenditure category is budgeted to cover the cost of travel to and from 137 526 40 000 33 430
events and conferences relevant to City operations All funds have been consolidated and any 40 000
travel and training requires the approval of the City Manager s Office
Training The City budgets funds for the development of employees through their participation in 68 720 27 000 21 295
training opportunities specific to their job classifications as well as to general training to improve
their knowledge and efficiency in delivering service to residents 27 000
All funds have been consolidated
and any travel and training requires the approval of the City Manager s Office

Equipment The City budgets for the purchase of equipment to replace pieces that are obsolete or 25 950 24 164 0
broken increases the replacement timeline for various pieces of 21 000
equipment No funds remain
Miscellaneous Reduces the ability of the to absorb 13 000
departments unanticipated necessary 13 000 0
No funds remain 13 000
expenditures
EDAC EDAC provides funding for employee development and training Budgets for both general 56 000 30 000 15 576
EDAC and EDAC training programs totals 56 000 24 000 EDAC 32 000 EDAC Training
EDAC will continue to coordinate events for staff all costs will be cover by participant fees 30 000
Employee recognition events will be scaled back Training will continue with smaller workshops
Leadership Academy will not be held

Operational Reductions Subtotal 380 000

Remaining Shortfall
o

Page 3 of 3
Attachment B City of Claremont FY 2009 10
Draft Budget Plan

2009 10 Shortfall
2 000 000

Contribution from the General Fund Reserve

Contribution of funds resulting from the of time General Fund revenues
receipt unanticipated one

Y FSC Lease The lease agreement with Tri City was not 79 000
included in the budget due to the agreement

being reached after the conclusion of the budget 197 000

process
Contribution from the General Fund Reserve 118 000

Remaining Shortfall 1 803 000

Vacancies
Savings

Receptionist H S 51 000
Maintenance Craftsperson II C S None
Senior Maintenance Assistant PT C S 21 000
Maintenance Assistant PT C S 15 000
Park Ranger PT C S 15 000
Park Ranger PT C S 15 000
Planning Intern C D 12 000

Vacancies Subtotal 129 000

Remaining Shortfall 1 674 000

Page 1 of 4
Attachment 8 City of Claremont FY 2009 10
Draft Budget Plan

Operational Reductions
Savings

Administrative Services Operating Budget be identified in the

Savings can following accounts

Budaet Savinas Remainina

Program Supplies Reduction in Community Information budget 400
10 6 500 3 900
eliminates budgeted one time City wide mailing

Legislative Activity Reduction in funding for Council legislative trips 6 500 3 500 3 000
and conferences

Contingency The City Manager maintains a contingency fund 160 000 70 300 89 700
in order to be prepared for unanticipated cost
throughout the year Reduction of this fund may
require staff to request funding from the Council
for unanticipated costs

Advertising Due to the hiring freeze non essential positions 23 500 12 000 11 500
there is a reduced need for advertising jobs
154 300
Personnel Exams Due to the freeze
hiring non essential positions 425
23 11 000 425
12
there is a reduced need for new hire exams

Community Survey Eliminated

20 000 20 000 0
Council Commissioner Dinner Event will be reduced to a 7 000 6 000
recognition reception 1 000

City Letter City Letter will only be mailed 2 times a year The 42 000 20 000 22 000
other 4 issues will be produced and copies left at
City facilities for pick up and the City website for
download

Community Outreach No Council handouts such as the sustainability 9 000 5 000 4 000
bags fans at the 4th of July and Village Venture

booths
Community Development Operating Budget Savings can be identified in the following accounts

Budaet SavinQs Remainina

Nuisance Abatement Based on year to date actuals it is anticipated 40 000 20 000 20 000
sufficient funds remain to meet the need

Contract Services 70 000

Delays the transfer of plans to electronic format 298 100 50 000 248 100
project planning has been working on It also
reduces engineering s ability to respond to non

Page 2 of 4
Attachment B City of Claremont FY 2009 10
Draft Budget Plan
Operational Reductions
Savings
Community Services Operating Budget Savings can be identified in the following accounts

Budaet Savinas Remainina

Program Supplies Reduction in Claremont Hills Wilderness Park 37 050 2 000 35 050
tours and reduces to
ability replace signage
Contract Services Reduces several contract maintenance services 889 839 37 000 852 839
including painting pressure washing park
repairs Thompson Creek trail plant
service rental and reduction in sport field 50 000

maintenance Individual accounts being reduced

retain sufficient funding for essential service

Water Reduces the of from 3

frequency park watering 454
231 11 000 454
220
times to twice a week

Human Services Operating Budget be identified in the

Savings can following accounts Budaet Savinas Remainina
Program Supplies Reduction in YAC and TAC program supplies 40 285 8 000 32 285
Contract Services Eliminates theUniversity of La Verne 16 500 16 500 0
Psychological services counseling program
Equipment Maintenance Janitorial cost for Y FSC which is now the 18 200 18 200 0 53 700
responsibility of Tri City
Youth Scholarships Grants The is the amount
proposed savings historically 36 000 11 000 25 000
remaining in budget at the end of the FY

Meetings Travel This expenditure category is budgeted to cover the cost of travel to and from events 136 584 72 000 64 584
and conferences relevant to City operations All funds have been consolidated and any travel and training 72 000
requires the approval of the City Manager s Office

Training The City budgets funds for the development of employees through their participation in training 69 555 35 000 34 555
opportunities specific to their job classifications as well as to general training to improve their knowledge
and efficiency in delivering service to residents All funds have been consolidated and any travel and 35 000

training requires the approval of the City Manager s Office

Equipment The City budgets for the purchase of equipment to replace pieces that are obsolete or broken
increases the replacement timeline for various pieces of equipment No funds remain 27 000
27 310 27 000 310
Miscellaneous The City budgets for expected unanticipated expenditures that may arise
during the
course of the year Reduces the ability of the departments to absorb
unanticipated necessary 10 000
expenditures No funds remain 10 000 10 000 0
EDAC EDAC provides funding for employee development and training Budgets for both
general EDAC
and EDAC training programs totals 56 000 24 000 EDAC 32 000 EDAC Training EDAC will continue
to coordinate events for staff all costs will be cover by participant fees Employee 44 000
recognition events will be
scaled back Training will continue with smaller workshops Leadership Academy will not be held
56 000 44 000 12 000

Operational Reductions Subtotal

516 000

Remaining Shortfall 1 158 000

Page 3 of 4
Attachment B City of Claremont FY 2009 10
Draft Budget Plan

Benefit Reductions
Claremont Management Association CMA Division and Department Heads 235 000
Claremont Professional Association CPEA Planners and Engineers 70 000
San Bernardino Public Employees Association SBPEA Administrative and Technical Employees 253 000

Benefit Reduction Subtotal 558 000

Remaining Shortfall 600 000

Organizational Changes
Claremont Employee Association CEA Maintenance Sanitation Motor Fleet and Sewer Employees 100 000
Claremont Police Management Association CPMA Lieutenants
Sergeants Captains Org Changes Recommended by CPMA 200 000
Claremont Police Officers Association CPOA Officers and Corporals 300 000

Organizational Changes Subtotal 600 000

Remaining Shortfall o

Page 4 of 4