Memorandum

City of Lawrence

City Manager’s Office

DATE:	7/13/2010
TO:	David L. Corliss, City Manager
FROM:	Casey Toomay, Budget Manager
CC:	Cynthia Boecker, Assistant City Manager Diane Stoddard, Assistant City Manager Jonathan Douglass, Assistant to the City Manager
RE:	Solid Waste Budget Information

Pursuant to your direction, information regarding the 2011 budget for fund 502- Solid Waste is provided below.

Rate Study

The attached rate study explains the assumptions behind rates needed to support the recommended expenditures in 2011.  It also compares the proposed 2011 rates with those charges by other communities for solid waste services. 

Draft Ordinance

A draft ordinance adjusting the solid waste service rates for 2011 is attached.  The ordinance includes policy decisions for future consideration by the City Commission regarding new fees for disposal of large accumulations of waste and certain bulky items.   

Budget Detail

As shown on the detailed line items for the Solid Waste Fund, the 2011 recommended budget is $1.7 million greater than the 2010 budget.  However, the 2011 budget includes a transfer of $1.75 million in order to comply with the state budget law limiting budgeted fund balance.  Without that transfer, the 2011 budget is actually $43,672 less than the 2010 budget.

	2009 Actual	2010 Budget	2011 Budget
Total Expenditures	$9,898,933	$11,020,612	$12,726,940
Less transfer to achieve 5% Fund Balance	-	-	$1,750,000
Expenditures	$9,898,933	$11,020,612	$10,976,940

The 2011 budget is $2.8 million greater than 2009 actual expenditures.  Some of the factors driving the increase are outlined below.

· Regular salaries:  $175,400 decrease from 2010 regular salaries budget; 2% decrease from 2009 actual expenditures.  The savings from the reduction in positions is slightly offset by the increase necessary to fund the merit pool for eligible employees. 

· Overtime:  $54,000 decrease from 2010 budget and $55,000 or 32.5% decrease from 2009 actuals.  The division is managing overtime aggressively, changing work schedules to help cover Saturday services, and evaluating holiday services where possible.

· Part-time salaries:  $55,000 decrease from 2010 budget and $115,000 decrease from 2009 budget but greater than 2009 actuals.  The division has used summer temporary help to cover vacation time, injured employees, summer paint crews, WR/R interns, WR/R administrative support,  and summer peaks.  Part-time hiring has been severely limited due to budget conditions.  The division recommends continuation of summer paint crew, WR/R interns and administrative support.

· Kpers:  $84,000 increase over 2009 actual, as required by State.

· Health  insurance:   $16,000 increase over 2010 budget, $140,000 over 2009 actuals.  Over $40,000 savings to fund with elimination of five positions.

· Advertising:  Line items are consistent with 2010 and 2009 budgets.  Education and outreach are critical for keeping customers informed of solid waste services, any service changes (holidays), programs and events (hhw appointments, electronic recycling, compost sale, earth day, and energy conservation fair).

· Fuel:  Fuel is a significant input cost for solid waste.  The numbers budgeted have been relatively flat for the last three years.  Lower than anticipated prices per gallon did provide savings in 2009, but this line item must anticipate possible fuel pricing to the end of 2011 resulting in an increase of $167,000 over 2009 actuals in diesel fuel and a $15,000 increase in unleaded fuel. 

· Landfill charges:  Line item increased 27.9% over 2010 budget and 26.3% over 2009 actual.  Tonnage trends will be closely monitored for development of future budgets.  Negotiations with Hamm, Inc. are underway.  Initial staff analysis of the two options for implementation of rate increases is attached.   

· Vehicle replacement:  $239,000 decrease from 2010 budget and $68,000 less than 2009 actuals.  Numerous pieces of equipment have been deferred from scheduled replacement.  The fleet manager identified 4 units as critical for replacement in 2011 (3 rear loaders and 1 front loader). 

· Adjustment for fund balance.  In order to comply with the state budget law that limits budgeted fund balance forward to 5% of budgeted expenditures, a transfer of $1,750,000 is budgeted but will not be made in 2011.  The 2010 budget did not include a transfer for fund balance because budgeted ending fund balance did not exceed 5% of budgeted expenditures. 

Incentive System Tracking

The Solid Waste Division is now tracking total incentive hours per pay period using existing equipment and new coding in the AS400.  Staff can provide a report as desired by the City Commission.