Memorandum

City of Lawrence

City Manager’s Office

DATE:	5/13/2010
TO:	David L. Corliss, City Manager
FROM:	Casey Toomay, Budget Manager
CC:	Cynthia Wagner, Assistant City Manager Diane Stoddard, Assistant City Manager Jonathan Douglass, Assistant to the City Manager
RE:	2010 Budget – Anticipated Savings/Expenditure Reductions

As previously discussed, general fund revenues are now projected to be below budget levels for 2010.  According to the projections prepared at the end of the first quarter, general fund revenues are now projected to total $63,302,126, which is $1,743,281, or 2.7% below 2010 budget.

Excluding the transfer budgeted to achieve the statutory limit on fund balance; the 2010 budget for expenditures totals $64,870,629.  In order to ensure a balanced budget in the general fund for 2010, it will be necessary to reduce expenditures by $1,568,503.

Departments have identified anticipated savings / expenditure reductions totaling $1,569,216.  Details can be found on the attached table; however, most of the savings are summarized below.

• Expenditure Reductions.  Wherever possible, departments have identified line items that can be reduced in 2010.  Examples include reduced travel and training opportunities, deferred computer replacement, and reduced overtime expenses. 
• Eliminate / delay filling vacant positions.  There are a number of departments that anticipate salary savings from vacant positions.  The amount of savings will vary, as some of these vacancies will be filled in 2010 while others will not.  Examples include:

§ City Clerk, Human Resources, Risk Management – savings will occur from the elimination of the Administrative Services Director position.

§ Planning – savings will occur from not hiring a Historic Preservation Intern.  In addition, savings have been realized from a vacancy in the Transportation Planner position.  (Note – only 20% of the Transportation Planner is funded with local dollars.  The other 80% of this position is grant funded.)  

§ Information Systems – savings will result from not filling a Network Technician position.

§ Police –Recruits hired in 2010 began work in April.  Funds were budgeted for those positions for the entire year, resulting in anticipated salary savings.    

§ Engineering – savings will result from vacancies in two inspector positions.

§ Parks and Recreation – savings will result from three vacancies in the department. 

• Use reserve funds / reduce transfers to reserve funds.  The City has a number of reserve funds that can be used for expenditures.  It is preferable to make one-time purchases from these funds.  Making purchases from these funds in 2010 will reduce budgeted expenditures.  In addition, savings will be realized by reducing transfers to the various reserve funds.  It is important to note that these are one-time savings and may have long-term impacts if these reserves are not replenished.  Examples include:

§ Sales Tax Reserve Fund.  Reductions in county-wide sales tax collections mean less proceeds to transfer to the sales tax reserve fund.  The 2010 budget included a transfer of $400,000 to the sales tax reserve for parks and recreation maintenance.  This transfer will be reduced by $300,000.  In addition, the 2010 budget included $300,000 to be transferred to the sales tax reserve for the study of future parks and recreation facility needs.  This transfer will be reduced by $200,000. 

§ Capital Improvement Reserve Fund.  The 2010 budget included a transfer of $150,000 to this fund for capital improvements.  This transfer will be reduced by $50,000.

§ Equipment Reserve Fund.  The 2010 budget included a transfer of $150,000 to this fund for equipment.  This transfer will be reduced by $50,000.  In addition, police vehicles purchased in 2010 will be paid for from this reserve fund.

§ General Liability Reserve Fund.  Some of the City’s legal expenses will be paid from this reserve fund, reducing expenditures in the legal department. 

By reducing expenditures, eliminating or delaying filling vacancies, and spending/reducing transfers to reserve funds, expenditures should be in balance with projected revenues in 2010. 

Staff will continue to monitor revenues and will provide additional information on reductions if necessary.