CR 91-86 Budget Adjustments
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March 27, 1991 o P K \ ~ I Council Report # 91-86
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1991 BUDGET ADJUSTMENTS
Pro'Posed Action
staff recommends adoption of the following motion: Move to
amend the 1991 budqet as proposed by the city Manaqer.
Adoption of this motion will result in adjustments to the
1991 budget including the use of $100,000 of general fund
reserves, a decrease in expenditures of $100,000, and an
increase in Recreation Department revenues by $20,000.
Overview
The 1991 budget was adopted in December of 1990. This
budget was prepared in anticipation of some reduction in
aids from the state of Minnesota.
The City council has reviewed and concurred with a
contingency plan prepared by the staff. The contingency
plan was created as a method of dealing with known and
anticipated budget cuts from the 1991 budget.
The recommendation of the staff, at this time, is to respond
to the known and anticipated 1991 budget reductions in state
Aid by adjusting the budget at this time.
Primary Issues to Consider
0 Do the proposed adjustments conform to the contingency
plan?
0 What methods were used in determining the proposed
reductions in expenditures?
0 What impact will these adjustments have in service
delivery to Hopkins citizens?
Sup'Portinq documentation
0 Staff analysis of issues.
0 Goals of the contingency plan.
0 Proposed methods.
0 Problem statement
0 Recommended adjustments
0 Options
0 1991 expenditure/budget reduction
0 1991 expenditure/budget reduction by source
. ~ -r; /ld!e ,iL fJLL
steven C. Mielke, City Manager
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page 2
Report # 91-86
1991 Budget Adjustments
Staff Analysis of Issues
0 Do the proposed adjustments conform to the
contingency plan?
The proposed adjustments conform to the contingency plan in
that we are responding quickly and effectively in cuts to
state aids. We are attempting to maintain current service
levels and we are avoiding employee lay-offs.
0 What methods were used in the expenditure
reduction process?
The staff has reviewed the 5% contingency plan details and
has prioritized the reductions in such a way as to minimize
the effect on specific departments. These prioritized
listings were presented to the City Manager for review. The
City Manager then took the information provided and
summarized an extensive list of specific line item cuts in
order to meet the goal of $100,000 in added cuts. This
process has taken roughly 6 weeks but has the support of the
department heads. A decision was made early on that an
attempt would be made to limit cuts to "belt tightening"
rather than make major program modifications or layoff
employees. This is in line with the goals of the
contingency plan.
0 What impacts will the adjustments have on service
delivery to Hopkins citizens?
For the most part, Hopkins' citizens may not notice a
lowering of service levels due to these expenditure
reductions. However, internally, the reduction in personnel
will lower our productivity in the delivery of services. It
may take us longer to perform duties and will lower our
flexibility to deal with new or changed program
requirements. However, the modifications should be minimal.
The net effect of this budget cut is to lower our budget by
approximately 2%. Considering that we only had a 3%
increase in operating expenditures, the net impact on the
budget is to have a 1% increase in general fund expenditures
in 1991.
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page 3
Council Report # 91-86
1991 Budget Adjustments
GOALS OF THE CONTINGENCY PLAN
The goals of the contingency plan previously reviewed by the
Council are:
0 Respond quickly and effectively to cuts in state
aid.
0 Attempt to maintain current service levels.
0 Balance the City budget.
0 Attempt to avoid employee lay-offs.
0 Evaluate the budget with long range implications
in-mind
The budget adjustments which are being proposed are intended
to meet the stated goals of the 1991 general fund
contingency plan.
PROBLEM STATEMENT
Hopkins has been notified that the Local Government Aid
(LGA) payment for July 1991, will be reduced by $110,000.
Additionally, the governor has proposed an identical
reduction for the December 1991 LGA payment. Assuming the
Governor's proposal is adopted, the 1991 budget would need
to be adjusted by $220,000. This equates to a reduction in
LGA of 22.3%.
The proposed adjustments will allow for the $220,000
reduction in LGA. Although we are not certain of the amount
to be reduced in the December payment, it would appear
likely that the Governor's proposal is the most probable
scenario.
PROPOSED METHODS
I am proposing to adjust the budget using fund reserves,
reductions in expenditures, and increases in certain
revenues.
RECOMMENDED ADJUSTMENTS
I am recommending that the Council reduce budgeted
expenditures $100,000, use $100,000 in fund balance
reserves, and increase budgeted revenues by $20,000.
These adjustments would allow the City to meet the goals of
the 1991 general fund contingency plan and would also allow
the staff to carry out some budgeted expenditures which have
been on hold since the enactment of the contingency plan.
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Council Report 91- 86
1991 Budget Adjustments
The use of general fund reserves is made possible by the
frugal spending which occurred during the 1990 budget year.
We were able to under spend our budget by an amount adequate
to allow for the use of general fund reserves. The
increased revenues are proposed to be in the area of
recreation. The Council has previously discussed these
increased fees which are now budgeted to occur due to the
increase in fee structure by the joint recreation board.
OPTIONS
The Council has a variety of options in this regard. Some
of them are :
0 To adopt the recommended budget adjustments.
The impact of this option is a combination of revenue
enhancements, budget reductions and use of fund reserves.
This option, in my opinion, is closest to the discussions
. held during the 1991 budget hearings.
0 To instruct staff to review the budget and to
enact further cuts in expenditures
This option would probably have additional impacts on
existing programs. Further review may allow for minor
modifications without cutting programs. It would also allow
for less dependency on the use of fund balances.
0 To adopt budget adjustments which deal with only
the known cut of $110,000.
Since the city has only been notified of one cut, it is
possible that the State may not make added cuts in state
aids. If this method is adopted, I recommend that the
Council delay the use of general fund reserves. This would
allow the greatest flexibility in the future should added
reductions occur.
0 To review the proposed expenditure reductions and
to make modifications.
The expenditure reductions I am proposing do not necessarily
coincide with Council priorities. The Council could elect
to substitute other areas of the budget for recommended
reductions. Should this be the case, staff would recommend
that guidance be given to the staff and that this item be
sent back to staff for further review.
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1991 EXPENDITURE/BUDGET REDUCTIONS
. DEPT. CODE $ DESCRIPTION
COUNCIL 302 1,000 Policy development training
CITY MANAGER 101 4,800 Cut inter~ (six month)
247 1,000 Reduce Wellness Program
302 1,000 Reduce city training fund
570 1,500 Eliminate office furniture
ELECTIONS 302 300 Cut clerk's school
CITY CLERK 302 200 Reduce NIGP meetings
401 200 Eliminate Publications
FINANCE 100 2,200 Reduce Salary & Fringe
303 4,000 Shift contract mtc. to util. funds
ACTIVITY CENTER 570 2,700 Cabinets in library & Rasp RID. elim.
POLICE 100 2,200 Reduce salary and fringe
218 1,200 special OWl enforcement program
302 2,000 Travel,Conf, Schools reduced
100 17,000 6 Mo. wait to replace dispatcher
110 3,000 Overtime
FIRE 302 3,600 Travel, Conf . , Schools reduced
200 500 Office supplies reduced
201' 2,000 Uniforms/clothing
214 1,000 Fire Prevention
215 500 Hose Replacement
140 1,000 Fire Volunteers
CIVIL DEFENSE 304 400 Contract maintenance.
COMM. DEVELOP. 100 2,500 Early Retirement
302 2,700 Travel, Conf . , Schools
303 3,900 Expert & Professional Service
570 2,600 capital outlay
PUBLIC WORKS 100 25,000 Eliminate 1 position in street
224 1,000 Mall mtnc. reduction
. 225 2,000 street light supplies
305 8,000 Eliminate painting P. W. bldgs.
570 2,000 capital Equipment
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. 1991 EXPENDITURE BUDGET REDUCTIONS BY SOURCE
100 " 3-400 200 500
Personal Services & Capital $
Deoartment Services Charaes SUDDlies Outlay Total
City Council 1,000 1,000
City Manager 4,800 1,000 1,000 1,500 8,300
Elections 300 300
City Clerk 400 400
Finance 2,200 4,000 6,200
Activity Center 2,700 2,700
Police 22,200 2,000 1,200 25,400
Fire 1,000 3,600 4,000 8,600
Civil Defense 400 400
Community Development 2,500 6,600 2,600 11 ,700
Public Works 25,000 8,000 3,000 2,000 38,000
TOTAL $ 103,000
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