Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Cynthia Wagner, Assistant City Manager
CC:	Diane Stoddard, Assistant City Manager Casey Toomay, Budget Manager
DATE:	June 11, 2010
RE:	Revisions to Preliminary 2011 General Fund Budget

Outlined here are revenue and expenditure changes to the preliminary 2011 general fund budget.  These changes will be incorporated into the City Manager’s Recommended Budget presented in early July.   

Changes to Revenue Projections

Property Taxes:  the preliminary budget was prepared using an estimated 3.5% reduction in assessed valuation as provided by Douglas County.  Revised estimates obtained from the County now estimate a reduction in assessed valuation closer to 2%.  This results in an increase to revenues of $223,935. 

Final state estimates for assessed valuation are not anticipated until late June.  Further adjustments to property tax revenue estimates will be made as appropriate at that time. 

Fines and Fees:  estimates for municipal court fines and fees have been adjusted to reflect year-to-date collections.  These estimates have been adjusted upward by $150,000.

Expenditure Increases

KP&F Retirement:  the 2011 budget was built using estimated rates for non-discretionary personnel-related costs, including unemployment, KPERS (Kansas Public Employee Retirement System) and KP&F (KPERS police and fire retirement program).  Actual unemployment rates are still not available, and will not be until later this month. 

The preliminary budget was prepared before the actual KPERS and KP&F rates for 2011 were established.  The preliminary estimate was based on historical trends and statutory limits on potential increase for KPERS.  The actual rates have been obtained and while the estimate for KPERS was accurate, our estimate for KP&F was too low.

The City and employee contributions to KPERS and KP&F are established by state statute and are non-discretionary.  The City contribution is 7.75% of gross pay for this benefit for KPERS and 12.86% of gross pay for KP&F.  Employees covered by KPERS contribute between 2% and 6% of gross pay, depending on their hire date.  Employees covered by KP&F contribute 7% of gross pay.

For 2011, the total cost for the City’s contribution to KPERS for all funds is $1,965,852.  This covers 504 employees.  The total cost for the City’s contribution to KP&F is $2,783,099.  This covers 285 police and fire employees.

The preliminary general fund budget included $729,438 for KPERS retirement for 197 employees.  As noted earlier, the estimated KPERS rate was accurate and therefore, the budgeted amount will not change.

The preliminary 2011 general budget included $2,563,573 for KP&F for 279 police and fire employees.  The actual KP&F rate will increase to 14.57%, increasing total general fund costs for KP&F covered employees to $2,724,381, an increase to the general fund of $160,809.

Jail Costs:  the police department budget has been adjusted to reflect increased costs for prisoner housing at the Douglas County Jail.  Even with anticipated reductions in prisoner days due to the recently approved booking station, increases in jail costs are anticipated due to increases in the daily rate from $67.87 per day to $70.31 per day.  The budget has been increased by $100,000.

Other County Costs:  On Friday, June 11, staff received additional information from Douglas County relating to planned increases in their costs for community corrections, the emergency communications center and judicial law enforcement building.  Staff is still trying to determine what those changes are and an appropriate funding level.  Revised budget estimates include an increase of $116,000 for these three items. 

Reductions identified by departments as part of their 2011 budget submittal:

The following reductions were provided by departments as part of the City Manager’s request for 2.5% reduction to non-personnel items.  These reductions were not included in the preliminary budget, but will be included in the City Manager’s Recommended Budget.

City Manager’s Office:    the bulk of reductions come from lower insurance premiums due to 2009 premiums being less than budgeted, creating a smaller based upon which to build for 2010 and 2011 budgets; reductions are also include for printing/advertising, ERC programs, and office supplies in the human resources division and travel and dues in the risk management division.  ($23,350)

Finance:  reduction to travel and training and supplies.  ($500)

Fire Department:  reduce staffing of ambulance stationed at Baldwin City station from two paramedics currently provided to one.  This meets the staffing level outlined in the Cooperation Agreement Concerning the Provision of Emergency Medical Services in Douglas County.  Moving this staff person to Lawrence response will allow reductions to city overtime costs. ($64,332)

Legal Services:  reductions to professional services, telephone costs; supplies; microfilm and imaging, janitorial contracts and travel.  ($11,364)

Information Systems:  reductions to conferences/seminars; telephone expenses and computer equipment.  ($8,497)

Planning and Development Services:  reductions to educational expenditures; legal ads; contractual services; computer equipment; overtime; software and gasoline.  ($6,200)

Parks and Recreation:  reductions to contractual services; supplies; tree removal; professional services and repairs.  ($31,250)

Public Works:  a significant portion of reductions comes from reducing building maintenance funding, including contractual maintenance at the community health building; additional reductions include reduced allocation for apron construction at the airport; equipment maintenance funding for the levee; reduced service contracts at the community health facility; reductions to overtime, training, equipment, contractual services and supplies.  ($33,170)

Staffing and Other Personnel Related Reductions:

The following reductions have been identified to be included in the City Manager’s Recommended Budget.

Information Systems:  do not fund currently vacant information systems tech position.  ($45,416)

Parks and Recreation:  do not fund two currently vacant positions – parks maintenance employee and horticulturist.  ($76,755)

Public Works:  do not fund two currently vacant positions – senior inspector and project inspector.  ($96,283)

Benefit Costs Associated with Vacant Positions:  depending upon the timing of vacancy created, costs for healthcare benefits may be reduced for the positions recommended for reduction above.  ($28,800)

Retiree Healthcare:  the City Manager’s Recommended Budget will include a recommendation to eliminate the City’s 20% contribution for retiree healthcare.  ($58,000)