Background/Summary:
Each year the City Council adopts a balanced capital and operating budget which sets the framework for department work plans in the upcoming year. Embedded within these documents are the resource allocations that allow for numerous programs, services and activities to be carried out within the community. From time to time, unplanned expenditures require additional resource allocations to ensure the City can meet its organizational and departmental objectives. In these circumstances, staff utilizes budget adjustments as a way to address those unplanned costs that impact the current year financials.
As outlined in the City’s adopted Principles of Financial Management, the City Council must authorize any budgetary changes related to increases in service levels, authorized personnel (FTE’s) OR uses of contingency appropriation. This practice has allowed the city to effectively manage the resource allocations as our economic and financial outlook changes.
For FY2017, the Budget Office has reviewed and recommended the following budget adjustments to ensure adequate funding is available to meet year end expenditure estimates.
1. PeopleSoft Benefits Administration Uplift Costs
The City has a current contract and licensing agreement with Oracle Corporation for the City’s PeopleSoft Financial, Human Capital Management (HCM) and Benefits Administration modules. Upon the conclusion of the most recent Licensing Verification Review, it was determined that the city has crossed the licensing threshold for Benefits Administration triggering an “uplift” payment of $13,800. This is a one time request, as the city will be converting to the ADP Vantage product in July and will no longer require HCM or Benefits Administration licenses through PeopleSoft.
Staff requests a budget adjustment in the amount of $13,800 from the General Fund contingency account (1000-0300-570000) to the Human Resources Computer Software Support and Maintenance account (1000-0200-525008).
2. Fire Station 193 Remodel
In FY2016, the City Council approved a project to complete a remodel of Fire Station 193 along with other Fire station improvements (PW00090). The project at Station 193 included interior improvements such as a complete refresh of the shower and restroom facilities and a reconstruction of the kitchen. The original project scope did not contemplate the need for a commercial kitchen, however, once the architectural plans were submitted to the City for review, it was determined that a commercial kitchen would be required based on city code. As such, a budget adjustment is needed to fully complete the kitchen remodel.
Fire Department staff request a budget adjustment in the amount of $52,000 from the General Fund Contingency Account (1000-0300-570000) to the Fire Station Building Need Project (1000-0310-524002-CIPOF-PW00090CO) to complete the project plan.
3. Legal Fees
The City Attorney’s Office has an annual budget of $18,000 for other outside counsel legal services and $5,000 for Administrative Hearings. However, the City Attorney’s Office has incurred legal services costs that are expected to reach $110,000. Those unforeseen costs are a result of the Schires v. Carlat lawsuit (Gift Clause) and tax issues arising from the City’s 2015 purchase of a private water company. Additionally, the City Attorney’s Office has incurred and expects to incur administrative hearing costs for hearing officers, court reporters, and Personnel Board legal counsel in the amount of approximately $40,000.
The City Attorney’s Office requests a budget adjustment in the amount of $60,000 from the General Fund contingency account (1000-0300-570000) to the City Attorney’s legal services account (1000-0200-520001) and an adjustment of $35,000 from the General Fund contingency account (1000-0300-570000) to the City Attorney’s administrative hearings account (1000-0200-520026) will ensure that necessary legal and professional services will be available to assist the City Attorney’s Office and meet the City’s legal needs.
4. Police Vehicle Replacement
The Police Department currently has a vehicle in need of early replacement. The vehicle is one of two vehicles equipped with license plate reader equipment. Recently it was determined that the vehicle needs approximately $7,000 in repairs to replace the fire suppression system, a critical safety element for Police vehicles. Due to the extensive repair costs, the city’s Fleet Services recommends that vehicle #1675 is replaced rather than repaired.
The Police Department requests that the vehicle be replaced in the current fiscal year and that council approve a budget adjustment in the amount of $45,000 from the Fleet Reserve Fund Contingency account (3100-3500-570000) to the Fleet Reserve Vehicle Replacement account (3100-3500-542501)
5. Regional Dial-a-Ride – Para Transit Service
Over the past year, the city’s regional Dial-A-Ride Services implemented new procedures that eliminate transfers between dial a ride service areas. This enhanced service, referred to as RDAR – Regional Dial-a-Ride, and provides a consistent region wide approach to serving senior and ADA eligible riders. As a result of these changes, ridership has increased and costs associated with the program have increased as well.
Public Works Department/Transit Services Division requests a budget adjustment in the amount of $70,000 from General Fund Contingency account (1000-0300-570000) to the Transit Division Other Professional Services account (7150-7200-520099) to address current and estimated budget shortfalls.
6. Credit Card Fees
Staff is requesting a budget adjustment in the amount of $150,000 to cover an increase in the number of customer accounts choosing to utilize credit cards as their form of payment for monthly utility bills. As the city grows, our customer base grows as well as the use of credit card payments. While this impacts the amount of credit card service fees charged to the city, from the City’s perspective, this is an excellent option to help insure timely payment without the difficulties that can be experienced with returned personal checks. Currently, approximately 33% of customers use a credit card for payment of their monthly utility bill.
Staff requests a budget adjustment in the amount of $150,000 from the General Fund Contingency account (1000-0300-570000) to the Customer Service Bank Services Account (1000-0450-520010). This budget request reflects the increase in the number of credit card transactions being processed. A similar budget request was recommended and tentatively approved in the FY2018 budget.
7. Workers Compensation Claims
The City of Peoria provides a workers’ compensation program, which addresses compensation claims by employees affected by workplace injury or illness issues. To support these expenses, the City self-insures its workers compensation program, setting aside reserves to address pending claims. These reserves cover the cost of medical claims for the injured worker as well as potential estimated lost wages as determined by an actuary. In FY2017, the budget for these claims was set at $1,250,000; however, staff is estimating $1,400,000 will be paid in claims by the end of the fiscal year.
Staff is requesting that council approve a budget adjustment in the amount of $150,000 from the Workers’ Compensation reserves account (3210-3620-570000) to the Workers Compensation Claims account (3210-3620-323018) to be able to pay potential claims in FY2017.