06-11-2018 - Budget Policy - Item No. 1.pdf
AGENDA STAFF REPORT
City of West Covina | Office of the City Manager
DATE: June 11, 2018 TO: Mayor and City Council
FROM: Chris Freeland
City Manager
SUBJECT: BUDGET POLICY
RECOMMENDATION:
It is recommended that the City Council approve the Budget Policy effective July 1, 2018.
BACKGROUND:
On May 6, 2014, the City Council directed staff to prepare a report that details the process and
cost of a California State Controller’s Office (SCO) audit of the City of West Covina (City).
On June 3, 2014, the City Council directed staff to prepare and send a letter to the SCO requesting
an audit of an agreed upon list of items to be examined by the SCO. On June 17, 2014, the City
requested the SCO to conduct an audit of the City’s internal control and fiscal management
practices.
The SCO reviewed the City’s system of administrative and internal accounting controls for the
period of July 1, 2011, through June 30, 2013.
The SCO found weaknesses in the City’s administrative and internal accounting controls system,
resulting in numerous findings that should be addressed and corrected by the City. On September
23, 2015, staff reported to the City Council the City’s responses to the SCO’s findings.
DISCUSSION:
The City engaged the consultant services of Lance, Soll, and Lunghard to draft the administrative
policies and procedures recommended to be done by the SCO findings. Several other
recommended policies and procedures, namely, Cash Management, Revenue and Receivables, Expenses and Payables, Payroll, Capital Asset Management, Debt Management, and Financial
AGENDA
ITEM NO. 1
Budget Policy
Page 2 of 2 — June 11, 2018
Reporting have been reviewed, revised as appropriate and approved by the Executive Staff team.
These policies and procedures will be effective July 1, 2018. The Budget Policy is for City
Council's consideration for approval.
The objective of the Budget Policy is to establish a budget process that helps decision makers make
informed choices about the provision of services and capital assets. The Budget Policy
(Attachment No. 1) is to provide the most efficient and effective operations of preparing the
budget. The Budget Policy covers four main principles:
1) Establish Broad Goals to Guide Government Decision Making
2) Develop Approaches to Achieve Goals
3) Develop a Budget Consistent with Approaches to Achieve Goals
4) Evaluate Performance and Make Adjustments
The budget policy will serve as a guide for maintaining the City's reputation for fairness,
transparency, and integrity of fiscal responsibility in preparation of the annual budget using proper
checks and balances.
OPTIONS:
The City Council has the following options:
1) Approve Staffs recommendation; or
2) Provide alternative direction.
FISCAL IMPACT:
There is no fiscal impact.
Prepared by:
ATTACHMENT:
Attachment No. 1 — Budget Policy
ATTACHMENT NO. 1
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City of West Covina
Budget Policy
July 1, 2018
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This document defines the policies and procedures for the budget for the City of West Covina.
The procedures serve as a guide for maintaining the City’s reputation for fairness and integrity of fiscal
responsibility in preparation of the annual budget using proper checks and balances. The budget functions will be
conducted using the highest ethical standards.
The objective of the budget policy is to establish a budget process that helps decision makers make informed
choices about the provision of services and capital assets and to promote stakeholder participation in the process.
The term “stakeholder” refers to anyone affected by or has a stake in the City of West Covina. This term includes,
but is not limited to: residents, customers, elected officials, management, employees and their representatives (such as unions or other agents), businesses, other governments, and the media.
INTRODUCTION
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PURPOSE:
Policy and procedures have been established in order to provide the most efficient and effective operations of
preparing the budget. The budget process will cover four main principles:
1) Establish Broad Goals to Guide City Decision Making
a. The City Council should adopt broad goals on an annual basis that provide overall direction for the
City and serve as a basis for decision making.
2) Develop Approaches to Achieve Goals
a. The City should have specific policies, plans, programs, and management strategies to define how it will achieve its long-term goals. 3) Develop a Budget Consistent with Approaches to Achieve Goals
a. A financial plan and budget that moves toward achievement of goals, within the constraints of
available financial resources, should be prepared and adopted.
4) Evaluate Performance and Make Adjustments a. Programs and financial performance should be continually evaluated, and adjustments made, to encourage progress toward achieving goals.
THE BUDGET OBJECTIVES:
Establish Broad Goals to Guide City Decision Making
1. Assess community needs, priorities, challenges and opportunities
2. Identify opportunities and challenges for City services, capital assets, and management 3. Develop and disseminate broad goals
Develop Approaches to Achieve Goals
4. Adopt and review financial policies 5. Develop programs, services, operating, and capital policies and plans 6. Develop management strategies
Develop a Budget Consistent with Approaches to Achieve Goals
7. Develop a process for preparing and adopting a budget
8. Make choices necessary to adopt a budget
Evaluate Performance and Make Adjustments
9. Monitor, measure, and evaluate performance
10. Make adjustments as needed
BUDGET PROCESS
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THE BUDGET PROCESS:
Establish Broad Goals to Guide City Decision Making
Assess Community Needs, Priorities, Challenges, and Opportunities
1.1 Identify Stakeholder Priorities, Needs, and Concerns
A. The City Council meetings are an open forum providing opportunity to stakeholders to bring forth concerns, needs, and priorities. B. Among other mechanisms that might be considered are special public hearings, surveys, meetings of
leading residents and resident interest groups, City strategic planning processes, meetings with City
employees, and workshops involving City administrative staff and/or the City Council.
1.2 Evaluate Community Condition, External Factors, Opportunities, and Challenges
A. The City Council should regularly collect and evaluate information about trends in community condition, the external factors affecting it, opportunities that may be available, and problems and issues that need to
be addressed.
B. Some mechanisms will involve data gathering from preexisting sources or through opinion surveys.
C. Other mechanisms will be subjective, such as observing physical characteristics of geographic areas within
the community or talking to residents, experts, business and community leaders, and legislative bodies. Formal studies of particular issues or trends may also be undertaken.
Notes: The intent of this practice is for the City to have up-to-date information with which to evaluate community
conditions and major issues that are integral to the development and achievement of goals. In evaluating community
condition, the City may want to consider local, regional, national, and global factors affecting the community,
including:
· Economic and financial factors,
· Demographic trends,
· Legal or regulatory issues,
· Social and cultural trends,
· Physical (e.g., community development) or
environmental factors,
· Intergovernmental issues, and
· Technological change.
The frequency and extensiveness of the evaluation should be consistent with how frequently the information
changes and the relative importance of the information being gathered.
Identify Opportunities and Challenges for City Services, Capital Assets, and Management
2.1 Assess Services and Programs, and Identify Issues, Opportunities, and Challenges
A. The City should inventory, identify, and assess the programs and services that it provides, their intended
purpose, and factors that could affect their provision in the future.
B. Identify the changes in community conditions or other factors that may result in a program or service no longer addressing the needs it was intended to serve. Also, identify any changes in the operating
environment that may affect the cost or effectiveness of service delivery in the future.
C. The review should involve each department’s assessment of the programs’ purposes, beneficiaries and
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needs served, their success in achieving goals, and issues, challenges, and opportunities affecting their
provision in the future.
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D. The inventory of programs and services should identify the organization responsible for service delivery if
it is not the City itself. An evaluation of factors affecting service delivery should also be undertaken, such
as funding issues; changes in technology; economic, demographic, or other factors that may affect
demand; and legal or regulatory changes. These reviews will typically utilize a variety of information
sources. E. Stakeholder involvement in these reviews should be encouraged, such as through budget study workshops.
Notes: The intent of this practice is to ensure that the City understands the programs and services that it
provides.
2.2 Assess Capital Assets, and Identify Issues, Opportunities, and Challenges
A. The City should identify and conduct an assessment of its capital assets, including the condition of the assets
and factors that could affect the need for or ability to maintain the assets in the future. The capital assets of the City and their condition are critical to the quality of services provided, and hence are important in determining whether the needs and priorities of stakeholders can be met.
B. The City shall establish a process for inventorying its capital assets and assessing the need for and the
condition of these assets. (See Capital Asset Management Policy)
C. The City should assess and evaluate issues, challenges, and opportunities affecting the provision of capital assets in the future, such as community needs and priorities; the impact of deferred maintenance; funding issues; changes in technology; economic, demographic, or other factors that may affect demand; and legal
or regulatory changes. This review may be undertaken in conjunction with an evaluation of the program
or service utilizing the particular assets.
D. The assessment of capital asset condition should consider the impact of any deferred maintenance and needed improvements. Identification or development of measurement standards for the condition of capital assets (including what is regarded as acceptable) are a valuable output of this practice.
Notes: Reviews of the condition of a capital asset and how well it is meeting its intended purpose may not be undertaken very often, particularly if there is little change occurring. However, the information obtained from these assessments can be an important component of an overall evaluation of community needs and issues.
Particular attention should be paid to the extent of deferred maintenance, the impact on service quality, and the
impact on costs.
2.3 Assess City Management Systems, and Identify Issues, Opportunities, and Challenges
A. The City should identify and analyze its organization and management systems, including system strengths
and weaknesses and factors that could affect these systems in the future. The support systems established to manage the City are integral to the achievement of goals.
B. The City should inventory management systems by department and routinely identify, analyze, and address
issues related to the City’s organization and management systems and the environment in which these
systems operate.
C. Each department should include an examination of strengths and weaknesses of the organizational structure, interdepartmental communication and cooperation, communication of goals and directives, motivation of
staff, conflict management, and provision of other internal needs and support systems.
D. The review also should include an assessment of management policies, procedures, and systems that support
achievement of goals.
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Develop and Disseminate Broad Goals
3.1 Identify Broad Goals
A. The City should identify broad goals based on its assessment of the community it serves and its operating
environment. Broad goals define the priorities and preferred future state of the community or area served.
They provide a basis for making resource allocation decisions during the budget process and serve as a
focal point for assessing and coordinating various long-range or strategic plans.
B. Goals should be expressed in written form and should reflect stakeholder concerns, needs, and priorities as well as factors affecting the community and the City. C. They must be sufficiently specific to help define the services to be emphasized and make difficult resource
allocation decisions in the budget process.
D. Define priorities among goals to improve their usefulness in allocating resources.
Notes: This practice builds on work accomplished through elements addressing the identification of community needs and priorities, and evaluation of community condition and the City’s operating environment. Goals should
be developed proactively rather than reactively and with the involvement of all levels and units of government.
Broad goals may conflict at times. Care must be taken to evaluate the interaction between conflicting goals and develop a sufficient degree of consensus on priorities so that all stakeholders have a clear understanding of the direction in which the City is heading. Once goals are established, more detailed action plans can be developed and integrated with management and budget processes.
3.2 Disseminate Goals and Review with Stakeholders
A. The City should disseminate broad goals and review them with stakeholders. Disseminating and
reviewing goals helps foster participation, awareness, consensus, pride, and a sense of direction.
B. Dissemination may occur by conducting public forums and by publishing goals in key public documents,
such as strategic and other planning documents and budget documents. Electronic media may also be used including the City website.
Notes: To be effective, broad goals need to be actively discussed on an ongoing basis. Stakeholders also need to
understand how these goals relate to policies, action plans, and resource allocation decisions. In disseminating
goals, the City encourages feedback from stakeholders, both on the goals themselves and on related policies and practices.
Develop Approaches to Achieve Goals
Adopt and Review Financial Policies
4.1 Develop Policy on Stabilization Funds
A. The City developed policies to guide the creation, maintenance, and use of resources for financial
stabilization purposes. (See Fund Balance policy) B. The policy establishes how and when the City builds up stabilization funds and should identify the purposes for which they may be used.
Notes: The Fund Balance Policy should be reviewed annually to assess the alignment with set goals established
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in the budget process. The City should evaluate reserves set in the fund balance policy. These funds may be used
at the City’s discretion to address temporary cashflow shortages, emergencies, unanticipated economic
downturns, and one-time opportunities.
4.2 Develop Policy on Fees and Charges
A. The City has established a master fee schedule that identifies the manner in which fees and charges are set
and the extent to which they cover the cost of the service provided.
B. The fee schedules should be evaluated annually in the budget process to review all fees and charges, the level of cost recovery for services and the reason for any subsidy, and the frequency with which cost-of- services studies will be undertaken.
C. Policies on fees and charges should be publicly available and summarized in materials used in budget
preparation.
Notes: Costs of service include direct and indirect costs such as operating and maintenance costs, overhead, and
charges for use of capital (depreciation and debt service). The City may choose not to recover all costs, but it
should identify such costs. Reasons for not recovering full costs should be identified and explained. State and
local law may govern the establishment of fees and charges. 4.3 Develop Policy on Debt Issuance and Management
A. The City has established a Debt Management Policy to guide the issuance and management of debt. Issuing
debt commits the City’s revenues several years into the future, and may limit the City’s flexibility to
respond to changing service priorities, revenue inflows, or cost structures. Adherence to a debt policy helps ensure that debt is issued and managed prudently in order to maintain a sound fiscal position and protect credit quality.
B. Debt policies should be made available to the public and other stakeholders. Because these policies are
essential to budget decision making, particularly capital budgets, they should be reviewed by decision
makers during the annual budget process and as an appendix in the budget document. Debt Policy should be reviewed for every debt issuance for compliance. C. The City Council should formally adopt debt policies and compile them with other financial policies.
Notes: Debt policies should be integrated with other financial policies, particularly operating and capital budget
policies. The policies should reflect statutory and legal requirements as well as the City’s financial condition and philosophy.
4.4 Evaluate the Use of Unpredictable Revenues
A. One-time or short-term revenues should be identified clearly in the budget process. Unpredictable revenue
sources cannot be relied on as to the level of revenue they will generate.
B. For each major unpredictable revenue source, the City should identify those aspects of the revenue source
that make the revenue unpredictable. Such as, grant supported operating costs.
C. One-time revenues should never cover the costs of continuing operating budgets. One-time revenues will only cover one-time costs such as matching requirements, one-time purchases, one-time payments to
unfunded liabilities, etc.
Notes: Many of the most important revenue sources relied on by state and local governments are unpredictable to
some degree. Examples may include intergovernmental revenues, interest income, sales and use tax, and
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transportation revenues. These revenues are often used to fund ongoing programs. A financial plan for the City
should take into account the unpredictable nature of key revenues. This ensures that the City understands the
potential impact on its ability to cover service costs and develops contingency plans in advance to address
unpredictable revenue fluctuations.
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4.5 Develop Policy on Balancing the Operating Budget
A. The City defines its Balanced Operating Budget as uses of resources for operating purposes does not exceed
available resources over the budget period, July 1st to June 30th.
B. The City is committed to a balanced budget under normal circumstances and will provide disclosures when a deviation from a balanced operating budget is planned or when it occurs. A balanced budget is a basic budgetary constraint intended to ensure that the City does not spend beyond its means.
C. Operating resources (revenues) includes all taxes, licenses and permits, fines and forfeitures, use of money
and property, charges for services, interdepartmental charges, miscellaneous revenues and
intergovernmental revenues in the General Fund, Special Revenue Funds, Capital Projects, Debt Service
Funds, and Internal Service Funds. D. Operating uses (expenditures) are personnel service costs, material and service costs, capital purchases, and
interdepartmental allocations.
Notes: This does not directly apply to capital improvement program budgets. Capital improvement program budgets are often funded at least partially from one- time resources. However, the ongoing maintenance or replacement of capital equipment or facilities is an important part of the budget process. Such items, particularly maintenance or
equipment replacements, are defined as operating items to ensure their inclusion in operating budget decisions.
Develop Programs, Services, Operating, and Capital Policies and Plans
5.1 Prepare Policies and Plans to Guide the Design of Programs and Services
A. Service and programs directly relate to strategies identified by the City to achieve set goals.
B. Each department of the City, such as City Council, City Manager, City Clerk, Police, etc. identify the programs and services along with groups or populations to be serviced, service delivery issues, specific programs listed with standards of performance (including level of service standards or other measures to
gauge success), expected costs, time frames for achievement of goals, issues pertaining to organization
structure, and priorities for service provision.
C. Each department identifies their goals and achievements by department which should correlate to overall goals of the City. D. Each department identifies the resources (revenues) used to obtain the goals.
5.2 Prepare Policies and Plans for Capital Asset Acquisition, Maintenance, Replacement, and Retirement
A. The City will annually evaluate the need to budget for acquisition, maintenance, replacement, and
retirement of capital assets to help ensure that needed capital assets or improvements receive appropriate
consideration in the budget process and that older capital assets are considered for retirement or
replacement. This is necessary to plan for large expenditures and to minimize deferred maintenance.
B. Annual budget evaluation may address inventorying capital assets and evaluating their condition, criteria for acceptable condition, criteria for continued maintenance versus replacement or retirement of an existing
asset, and identification of funding for adequate maintenance and scheduled replacement of capital assets.
C. Any assets identified as coming due for replacement may be addressed in multi-year budgets to address
replacement and renewal schedules and should recognize the linkage of capital expenditures with the annual
operating budget. D. Plans for addressing deferred maintenance may also be an output of this practice. Once adopted, which may
be included in the Capital Improvement Program (CIP) Budget, the plan should be made publicly
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available, particularly as set forth in budget, management, and planning documents.
Notes: Capital asset acquisition, maintenance, replacement, and retirement policies provide a basis for formulating
long-range plans to address capital needs.
5.3 Develop Options for Meeting Capital Needs and Evaluating Acquisition Alternatives
A. The City develops Capital Improvement Program Budgets to address capital needs that are consistent with
financial, programmatic, and capital policies and should evaluate alternatives for acquiring the use of capital assets. Capital project planning is necessary to give adequate consideration to longer-range needs and goals, evaluate funding requirements and options, and achieve consensus on the physical
development of the community.
B. Annually in the budget process the City evaluates alternative mechanisms to help ensure that the best
approach for providing use of a capital asset or facility is chosen based on the policies and goals of the City. C. The City uses the CIP Budget to identify capital projects that are needed to achieve goals and a general time frame in which these assets will be needed.
Notes: This practice is intended to encourage the City to consider whether capital project proposals (including retirement of assets) meet policies and plans. At a minimum, quarterly reviews of existing projects and facilities in relation to goal attainment also should be undertaken when deciding whether to maintain, renovate, replace, or abandon those facilities. Considerations in evaluating acquisition mechanisms include:
• Costs, including both capital and operating costs, impact on rates and charges, and impact on costs of other City services.
• Effects on service, including technical and financial capabilities of the entity that owns the
asset, ability to control the use of the asset (including expanding or contracting the facility),
ability to maintain the asset, and risk of contractual nonperformance and default.
• Management issues, including maintaining oversight of the asset and related services and
operations, impact on economic growth and development, impact on service coordination, and
public access to information.
• Financial issues, including availability of cash, budgetary impacts, impact on outstanding debt, and grant eligibility.
• Impact on stakeholders such as City employees, customers, and taxpayers.
• Statutory and regulatory issues, including impact on federal and state legal and regulatory requirements, and liability.
5.4 Develop Performance Measures
A. The City should annually, during the budget process, review and develop and utilize performance measures for functions, programs, and/or activities. Performance measures are used for assessing how efficiently and effectively functions, programs, and activities are provided and for determining whether program goals
are being met.
B. Performance measures should be linked to specific program goals and objectives.
C. The measures should be valid, reliable, and verifiable. D. Whenever feasible, they should be expressed in quantifiable terms. E. Measures should be reported in periodic reviews of functions and programs and should be integral to
resource allocation decisions.
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F. They also should be reported in the budget document and may be reported in separate management reports
or reports to residents.
G. Different aggregations of performance measures may be appropriate for different audiences.
Notes: There are several types of performance measures: inputs (resources), outputs, efficiency, and effectiveness (outcomes). Each of these types of measures serves a purpose, although only the measures of efficiency and
effectiveness truly report on performance. It is important that measures be chosen to ‘‘measure the right things’’ -
--- that is, they must be relevant to the goals of a program. Sources of data for performance measures include existing records, trained observer readings, and surveys. Performance measures can help department heads direct and manage their departments. They also provide tools for department heads to determine the most appropriate tasks to perform.
Develop Management Strategies
6.1 Develop Strategies to Facilitate Attainment of Program and Financial Goals
A. The City should develop an organizational structure and management strategies to facilitate attainment of
program and financial goals. Goals are more likely to be achieved if organizational and management
strategies are developed to support and encourage organizational and individual performance directed toward goal attainment.
B. The City should develop, review, improve, and implement strategies that encourage the City and its
employees to work toward achievement of goals.
C. These strategies include both positive incentives and penalties.
D. They also include support systems such as technology support, education, and training.
Notes: While this practice is intended to address strategies that focus on both rewards and penalties, it is expected
that emphasizing rewards will produce more beneficial results for the organization. Each department may have
unique approaches and strategies for goal attainment.
6.2 Develop Mechanisms for Budgetary Compliance
A. Finance provides monthly budget to actual reports to each department head and City Manager to ensure
proper review for compliance with the adopted budget. Appropriate management processes and systems
allow the City to detect and correct significant deviation if it occurs. B. On a quarterly basis Finance provides budget to actual reports to department heads and City Council.
C. These reports provide measures of departments’ budget.
D. Budgetary compliance is encouraged through use of data collection and reporting systems that control
disbursements of funds and that facilitate the evaluation of revenue and expenditure trends and financial
projections. E. City Manager should address any deviation of the budget to actual report.
F. The City should institute procedures to review the budget periodically monthly and decide on actions to
bring the budget into balance, if necessary.
Notes: Deviations caused by external factors or ‘‘big picture’’ issues are not as susceptible to management control and are not the focus of this practice. However, effective mechanisms to control the financial aspect of the budget
may help detect these external issues so that adjustments can be made to comply with the adopted budget.
6.3 Develop the Type, Presentation, and Time Period of the Budget
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A. The City will annually present the budget, which will cover the fiscal year July 1st through June 30th. The type of budget, the time period covered, and the manner of presenting materials in the budget documents can have a significant practical impact on the City’s approach to planning, control, and overall
management of its programs, services, and finances, and on the quality of information provided to
stakeholders.
B. The output of the budget will provide fund level and department level program information for the full fiscal year and the adopted budget will be provided to all stakeholders on the City website. C. A formal review will be undertaken periodically to ensure that the budget type, time period, and approach
to presenting the budget continue to meet the needs and priorities of the City.
D. Such a review will be broadly focused, and not directed simply at the format of individual pages.
Develop a Budget Consistent with Approaches to Achieve Goals
Develop a Process for Preparing and Adopting a Budget
7.1 Develop a Budget Calendar
A. The City publishes a comprehensive budget calendar that specifies when budget tasks are to be completed
and that identifies timelines for those tasks. This includes budget workshops available to the public.
Stakeholders need to be aware of when key budget tasks, events, and decisions will occur so they have an
opportunity to plan and to participate in the process. The preparation of a calendar helps ensure that all aspects of the budget process have been considered and that adequate time has been provided. B. Multiple calendars can be produced, each with different levels of detail and emphasis to meet the needs of
the different types of stakeholders. (ie. Internal Calendar and Public Calendar)
C. Calendars should list the dates of key events and deadlines.
D. At least one calendar should describe the overall budget and planning process and identify roles, responsibilities, and assignments. E. To ensure the greatest impact, calendars should identify when and how stakeholders can participate in the
process.
Notes: Budget calendars are a tool to keep participants involved in the process on track. Statutory deadlines should be highlighted. The calendar should make clear the relationships between various processes and should be developed to coordinate these processes. For example, a calendar may illustrate the relationship of the operating
and capital budget processes, or the processes of revenue forecast revision and budget reconciliation. The
development of a budget calendar is typically guided by statutory deadlines. Calendar development should also take into account other key organizational dates that affect participants in the budgetary process.
7.2 Develop Budget Guidelines and Instructions
A. The City will develop annual general policy guidelines and budget preparation instructions for each budget
cycle and accompany the internal budget calendar. Budget guidelines and instructions help ensure that the budget is prepared in a manner consistent with government policies and the desires of management and the
City Council. Instructions are necessary so that all participants know what is expected, thereby minimizing
misunderstanding and extra work.
B. Budget guidelines are specific to the particular budget under development and should incorporate relevant
aspects of the City’s financial policies. C. Each department is required to provide the Projected Actuals for revenues and expenditures of the current
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year for their respective department.
D. Each department is required to provide Proposed Revenues and Appropriations for the upcoming fiscal
year for their respective department.
E. They may set forth financial constraints and key assumptions that will be used to guide development of the
budget, as well as policy direction. F. Instructions often include sample forms to be completed by the operating departments. Guidelines and
instructions should be prepared in a written format but may also be presented in an electronic format or
through training and/or an oral presentation.
Notes: In developing budget guidelines and instructions, the City should consider the role played by the various stakeholders such as departments within the City or other agencies that are involved in budget preparation.
Involving stakeholders may be accomplished by holding meetings in which administrative staff and selected
internal and external stakeholders help develop the processes and general directions provided to budget preparers.
7.3 Develop mechanisms for Coordinating Budget Preparation and Review
A. The City should develop mechanisms and assign responsibilities to provide for overall coordination of the
preparation and review of the budget. The complete budget process involves many levels, departments,
and individuals in the City, as well as a number of distinct processes and disparate groups of stakeholders. Coordination is needed to ensure that processes move forward as planned, to prevent confusion and misinformation, and to ensure appropriate stakeholders are involved.
B. The Finance Department is the single point of coordination for all departments.
C. The Finance Department’s coordination process will involve a number of tasks: developing a calendar,
identifying responsibilities for completing various tasks, ensuring that various parts of the budget process are properly integrated, keeping the process on schedule, producing reports, identifying issues and problems, and ensuring that other requirements are met and quality standards are maintained.
D. The Finance Director has ultimate responsibility for coordinating the budget process and will respond to
stakeholder issues and concerns that arise in the context of the budget process with direction from the City
Manager and City Council. Notes: The assignment of coordination responsibility does not necessarily imply overall decision-making authority.
However, at a minimum, the coordinating person(s) should have immediate access to decision makers, as many
issues typically come before the coordinator for resolution. Coordination mechanisms may be established for inter- governmental interaction and legislative/executive branch interaction.
7.4 Develop Procedures to Facilitate Budget Review, Discussion, Modification, and Adoption
A. The City should develop and implement a set of procedures that facilitate the review, discussion,
modification, and adoption of a proposed budget. Appropriate procedures are needed to resolve conflicts, to promote acceptance of the proposed budget by stakeholders, and to assist in timely adoption of the
budget.
B. A series of processes should be developed that permit stakeholders to be informed of the budget proposal
and to allow the legislative body to achieve consensus and adopt a budget.
C. These processes should be summarized in budget materials or budget letter. Some examples include: small group meetings, hearings, workshops, independent analysis, specific decision-making techniques and
procedures, conflict resolution processes, and methods for presenting portions of the budget.
Notes: Discussion will inevitably be needed regarding the tradeoffs and choices that need to be made. Issues can
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be more satisfactorily addressed to the extent that there are clear and accepted processes for considering options
and reaching the compromise position that most budgets inevitably represent. Consistency over time in the budget
review and adoption process is important, but it is also essential to recognize that as the makeup of the
administration and City Council changes, the process may need to be adjusted.
7.5 Identify Opportunities for Stakeholder Input
A. The City should provide opportunities in the budget process for obtaining stakeholder input. By definition,
stakeholders are affected by the City’s resource allocation plans and service and program decisions. Stakeholders should have clearly defined opportunities to provide input. This helps ensure that stakeholder priorities are identified and enhances stakeholder support for the approved budget.
B. Stakeholder input can be obtained in a number of ways, including public hearings, advisory commissions,
informal conversations, round-table briefings, televised and live online broadcast, opinion surveys,
neighborhood meetings, office hours, letter writing, telephone calls, and e-mail. C. The budget calendar should identify specific opportunities for resident input where City officials are available to explain issues and choices and to receive comments.
Notes: The budget process should include opportunities for all stakeholders to participate. A general-purpose public hearing shortly before final decisions are made on the budget is not adequate as the sole means of soliciting stakeholder input, especially on major issues. The process developed for obtaining stakeholder input should ensure that information is gathered in a timely and complete manner to be useful in budget decision making, such as City
workshops.
Make Choices Necessary to Adopt a Budget
8.1 Prepare and Present a Recommended Budget
A. The City should prepare and present a recommended comprehensive program and financial plan (the
‘‘budget’’) for review by stakeholders and consideration for adoption by the City Council. A complete plan is necessary to allow stakeholders to be informed on how well all of the different aspects of the plan fit together and whether there is an appropriate balance of resources and assigned uses.
B. The proposed budget will consist of a set of recommended actions regarding programs and services to be
funded, including service level, quality, and goals to be achieved.
C. It will also identify funding requirements and sources of funds, and provide the supplemental information necessary to review the plans. D. The budget should be consistent with policies and goals set by the City.
E. The recommended budget must also comply with any statutory requirements.
Notes: The recommended budget should be the City’s considered approach to addressing stakeholder issues previously raised. As a comprehensive program and financial plan, the budget should include all programs and funds. Consideration also should be given to including closely related entities that may not otherwise have their
own budget or whose budget is important to the City, e.g., an urban renewal authority or a captive capital
leasing organization. A proposed budget consists of one or more separately bound documents. Ideally, the proposed budget should be a complete and comprehensive document that includes everything that will be in the adopted budget, except for any subsequent changes made by the legislative body and a copy of the appropriations resolution or bills authorizing the budget.
8.2 Present the Budget in a Clear, Easy-to-use Format
ATTACHMENT NO. 1
Page 16 of 19
A. Budget documents and related materials made available to stakeholders should be presented in a clear and
readily comprehensible format. The budget is the guide that determines the direction of the City. It is
arguably the single most important document routinely prepared by the City. To be usable, it not only must contain the appropriate information, but must also be prepared in a manner that is clear and comprehensible.
B. Some items in a budget document that will assist the reader include: a table of contents, summaries, a
consistent format, high-level summary information that describes overall funding sources and the
organization as a whole, a description of the overall planning and budgeting process and the interrelationships of those various processes, supplementary information about the City and the area for which it has responsibility, charts and graphs to better illustrate important points, succinct and clearly-
written summaries, uncluttered pages, and detailed information placed in appropriate locations so that it
does not overwhelm the reader.
C. Similar requirements apply to the non-written means (e.g., audio, video) of presenting budget material to stakeholders at various times during the budget process.
Notes: To achieve the goal of this practice, multiple formats may be used that are tailored to the needs of various
stakeholders. These may include brief summaries of important information to be used by different audiences to enhance their understanding of important budget issues and tradeoffs.
8.3 Adopt the Budget
A. The City should adopt a budget that meets all statutory requirements prior to the beginning of the fiscal
year. The timely adoption of a budget permits the City to proceed with implementing programs and services that further the achievement of goals.
B. The adopted budget should clearly present the financial, operating, and capital plan.
C. It should include all operations and funds, although not necessarily at the same level of detail.
D. Non-appropriated funds, revolving funds, and any other planned revenues and expenditures also should be
included. E. Whenever feasible, the adopted budget should include (though not necessarily in a single document) all
statutorily required materials such as the appropriation ordinance.
F. Legally required documents that otherwise do not contribute to an understanding of the budget may be
included as an appendix.
Notes: If there are delays in adopting the budget, actions should be taken to minimize uncertainty when the new
budget period starts, as appropriate. A continuing appropriation may be legally required.
Evaluate Performance and Make Adjustments
Monitor, Measure, and Evaluate Performance
9.1 Monitor, Measure, and Evaluate Program Performance
A. The City should quarterly evaluate the performance of the programs and services it provides. The City
functions, programs, and activities should be periodically reviewed to determine whether they are
accomplishing intended program goals and making efficient use of resources.
B. Performance measures, including efficiency and effectiveness measures, should be presented in basic
budget materials, including the operating budget document, and should be available to stakeholders.
ATTACHMENT NO. 1
Page 17 of 19
C. Performance measures should be reported using actual data, where possible.
D. At least some of these measures should document progress toward achievement of previously developed
goals and objectives.
E. More formal reviews and documentation of those reviews should be carried out as part of the overall
planning, decision-making, and budget process.
Notes: Evaluating and reporting on program performance on a routine, publicized basis keeps stakeholders
apprised of actual results compared to expectations. One option is to prepare regular reports of key performance measures, with in-depth evaluations or reviews conducted once every several years. Program performance information should be available during the budget process. Regardless of whether the program is provided by City employees or contracted out, the reporting and evaluation process should be similar.
9.2 Monitor, Measure, and Evaluate Budgetary Performance
A. At a minimum, the City should on a quarterly basis evaluate its financial performance relative to the
adopted budget. Regular monitoring of budgetary performance provides an early warning of potential
problems and gives decision makers time to consider actions that may be needed if major deviations in
budget-to-actual results become evident. It is also an essential input in demonstrating accountability. B. Budget-to-actual or budget-to-projected actual comparisons of revenues, expenditures, cash flow, and fund balance should be reviewed quarterly during the budget period. Staffing levels should also be monitored.
C. Comparisons for at least the current year should be included in the budget document and be generally
available to stakeholders during discussions related to budget preparation and adoption.
Notes: Consistency and timeliness are particularly important when implementing this practice: it is essential that
reports are prepared on a routine, widely-publicized basis. In addition to monitoring budget-to-actual results,
reasons for deviations should be evaluated. These factors are important in assessing the significance of variations,
including whether they are expected to be temporary or longer-term in duration.
9.3 Monitor, Measure, and Evaluate Financial Conditions
A. The City should monitor and evaluate its financial condition at least annually. The financial health of the
City is critical to its ability to meet the needs of stakeholders. Financial condition should be evaluated to
identify potential problems and any changes that may be needed to improve performance over both the short and long terms.
B. Financial indicator measures often are developed to monitor financial condition and achievement of
explicitly set financial goals.
C. Indicators to monitor factors that affect financial performance are also reported.
D. A report on financial condition should be periodically prepared and updated. E. The report may be a separate document or incorporated into other relevant documents, including the budget
document.
Notes: Financial condition is distinguished from budget performance. Budget performance identifies explicit short- term indicators, primarily revenue and expenditure status for the budget period. An evaluation of financial condition considers a broader array of factors that may have long-term implications for the financial health of the
City. These factors may include specific measures of the City’s financial performance (e.g., trends in operating
position or liquidity) as well as measures of the community’s general social, demographic, and economic
conditions.
ATTACHMENT NO. 1
Page 18 of 19
9.4 Monitor, Measure, and Evaluate External Factors
A. The City should monitor and evaluate external factors that may affect budget and financial performance
and achievement of goals at least annually. Factors outside the City’s control, such as the national or
regional economy, demographic changes, statutory changes, legislation, mandates, and weather, may
affect achievement of stated goals. Monitoring these factors helps the City to evaluate and respond to the effect of these external influences on goals, programs, and financial plans.
B. External factors that are likely to be important in achieving goals should be identified and monitored
regularly.
C. The results of this analysis should be factored into the assessment of program and financial performance
and considered in making adjustments to these programs. D. Trends and significant issues may be described in reports to stakeholders discussing program, budget, and
financial performance.
E. The assessment of external factors should be reported, at least in summary form, and available to
stakeholders.
Notes: Many external factors cannot be controlled or sometimes even predicted by the City. Contingency
planning can help address negative impacts or take better advantage of positive factors that might arise from
external events. To the extent that external events have long-range impacts, programs, plans, and goals may need to be adjusted to reflect these changes.
9.5 Monitor, Measure, and Evaluate Capital Improvement Program Implementation
A. The City should monitor, measure, and evaluate capital improvement program implementation at least quarterly. Monitoring the status of capital projects helps to ensure that projects progress as planned, problems (such as delays in key milestones and cost overruns) are identified early enough to take corrective
action, funds are available when needed, and legal requirements are met.
B. Reports on capital project implementation should be prepared for decision makers and other stakeholders.
C. Summary information should be considered for projects that are progressing as planned. D. Project milestones, such as dates for completion of such tasks as planning, land acquisition, engineering and design, and construction, should be identified and progress in meeting these milestones should be
reported at least annually.
E. The City should monitor quality compliance and financial performance.
Notes: A government may have a large number of significant projects. This is intended to promote the development of mechanisms to ensure that decision makers are not overwhelmed with information on which no decision is
needed and that they receive timely information where decisions or actions are required.
Make Adjustments as Needed
10.1 Adjust the budget
A. The budget should be adjusted during the budget period should unforeseen events require changes to the
original budget plan. The budget is a plan based on a set of assumptions that may not always match actual experiences during the execution phase. The City should watch for significant deviations from
expectations and make adjustments so that the plan is consistent with revised expectations.
ATTACHMENT NO. 1
Page 19 of 19
B. The City should have procedures in place to determine when deviations from the budget plan merit
adjustments to the budget.
C. Budget adjustments, whether to programs or to revenues and expenditures, should be made as appropriate.
D. Final changes to the budget should be reported.
E. The timing and manner in which this is done depends on the stakeholder group and the level of materiality of the changes.
Notes: Budget adjustments may be administrative or legislative depending on the adjustment needed and on statutory requirements such as the legal level of control of the budget appropriations. City Manager may make adjustment within the fund across departments as long as the overall appropriation is not changed.
10.2 Adjust policies, plans, programs, and management strategies
A. The City should adjust its policies, plans, programs, and management strategies during the budget period, as appropriate. Changing conditions or programs and services that are not producing the desired results or
efficiently utilizing resources may require adjustments in order for the City to continue to meet the needs
of stakeholders and to meet its own goals.
B. The City’s management team should evaluate their monthly budget to actual report for review, decision
making, and implementation of changes to policies, plans, programs, and management strategies during the budget period.
C. Adjustments should be based on findings obtained from monitoring and assessing program and financial
results, stakeholder input, and external circumstances.
D. Regular briefings to management and elected officials on the contents of the reports permit timely
adjustments as needed to the plan or program activities.
Notes: The adjustments made by the City should be based on its assessment of performance. This helps complete
the budget planning cycle and will feed into the review of services, goals, plans, and programs which occurs near
the beginning of the cycle. This is distinguished from the earlier review processes in that it is intended to focus more on mid-period adjustments, rather than on more fundamental changes that may be needed to achieve broad goals.
10.3 Adjust Broad Goals, if Appropriate
A. The City should modify or change its broad goals if conditions change sufficiently that these goals are no
longer appropriate. Goals may need to be adjusted in response to new information about program results,
stakeholder needs, and external circumstances in order to be more relevant for the community or more
practically attainable. B. The City department heads meet to evaluate performance or changes in the annual budget plan to ensure that goals are reviewed during the budget period and adjusted when appropriate.
C. Adjustments are based, in part, on findings obtained from monitoring and assessing program and financial
results, stakeholder input, and external circumstances.
D. Opportunities and challenges facing the City also should be considered.
AGENDA
ITEMNO. 2
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
DATE: Junell,2018
TO:
FROM:
Mayor and City Council
Chris Freeland
City Manager
SUBJECT: CITY COMMISSIONERS' STIPENDS
RECOMMENDATION:
It is recommended that the City Council adopt the following Resolution, eliminating City
Commissioners' stipends:
RESOLUTION NO. 2018-85 -A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF WEST COVINA, CALIFORNIA, REPEALING AND
REPLACING RESOLUTION NO. 2016-72, RELATING TO STIPENDS OF
NON-ELECTED CITY COMMISSIONERS
DISCUSSION:
At the March 6, 2012 City Council Meeting, the City Council adopted Resolution 2012-18 to
reduce all City Commissioners' stipends by 50%, effective April 1, 2012, due to fiscal challenges
facing the City. Therefore, Planning Commissioners' stipends were reduced from $150 per month
to $75 per month, regardless of the number of meetings held in a month; and the Community &
Senior Citizens and Human Resources Commissioners' stipends were reduced from $100 per
month to $50 per month, regardless of the number of meetings held in a month.
At the August 16, 2016 City Council Meeting, the City Council adopted Resolution 2016-72
(Attachment No. 1) to increase all City Commissioners' stipends. Specifically, Commissioners
receive a stipend of$75 per meeting, with a maximum compensation of$150 per month. This is
to include any Special or Joint Meetings held with other City Commissions or the City Council.
Therefore, those City Commissions that meet every-other-month, may receive additional
compensation if a meeting is rescheduled to an off month due to scheduling conflict or for a Special
Meeting to conduct City business.
At the May 14, 2018 Preliminary Budget Workshop, the City Council instructed staff to move
forward with the elimination of City Commissioners' stipends due to the current fiscal challenges
City Commissioners' Stipends
Page 2 of2 -June 11, 2018
facing the City. In an effort to have in place by July 1, 2018, City staff is recommending the
adoption of Resolution 2018-85 (Attachment No. 2).
OPTIONS:
The City Council has the following options:
1. Approve staffs recommendation; or
2. Provide alternative direction.
FISCAL IMPACT:
Adoption of Resolution 2018-85 will generate a General Fund savings of$16,300.
Prepared by:
CQr~
City Manager
ATTACHMENTS:
Attachment No. 1 -Resolution No. 2016-72
Attachment No. 2 -Draft Resolution 2018-85
ATTACHMENT NO. 1
RESOLUTION NO. 2016-72
A RESOLUTION CH' THE CITY COUNCIL O.F THE CITY OF
WEST COVINA, CALIFORNIA, REPEALING AND REPLACING
RESOLUTION NO. 2012-34, RELATING TO STIPENDS OF NON-
ELECTED CITY COMMISSIONERS
WHEREAS, the City of West Covina provides stipends to members of City non-
elected City Commissions;
WHEREAS, the City of West Covina decreased stipends for Cily Commissioners
in 2012;
WHEREAS, the City of West Covina wishes to increase stipends for City
Commissioners to compensate them appropriately for their service to the community.
NOW THEREFORE, the City Council of the City of West Covina does resolve
the following:
SECTION 1. That Resolution 2012-34, related to the monthly stipend for
serving in City non-elected commissions is hereby repealed in its entirety.
SECTION 2. City Commissioners shall hereafter be compensated as follows:
1. City Commissioners' stipend shall be $75.00 per regularly scheduled
meeting, up to a maximum $150.00 per month, as provided in California
Govenunent Code Section 36516; and
11. City Commissioners will receive compensation for attending Special
Meetings, in addition to, or to replace regularly scheduled meetings, as
requested, hut in no instance, will Commissioners he compensated more
than $150.00 per month.
SECT10N 3. That City Commissioners shall only receive a stipend for those
meetings they attend.
SECTION 4. The eftcctive date of this Resolution is September I, 20 I 6.
SF.CTI ON 5. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED AND ADOPTED this 161h day of August, 2016.
APPROVED AS TO FORM: ATTEST:
~?b£~
City Attorney
I '
I, I1ER.El3Y CERTIFY that the foregoing re~olution was duly adopted by the City Council of the
City of West Covina, California, at a regular meeting thereof on the 16th day of August, 2016, by
the following vote of City Council:
AYES:
NOES:
ABSENT:
ABSTAIN:
Johnson, Wu, Toma
Spence
Warshaw
None r ~-~ 12~fl« {, ickolisITewis '', · , · ' .. City Clerk' ( : : ·, 1 . . -
. ..._
' '
ATTACHMENT NO. 2
RESOLUTION NO. 2018-85
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WEST COVINA, CALIFORNIA, REPEALING AND REPLACING
RESOLUTION NO. 2016-72, RELATING TO STIPENDS OF NON-
ELECTED CITY COMMISSIONERS
WHEREAS, the City of West Covina provides stipends to members of City non-elected
City Commissions;
WHEREAS, the City of West Covina decreased stipends for City Commissioners in 2012
and increased them in 2016;
WHEREAS, the City of West Covina wishes to eliminate stipends for City
Commissioners due to the fiscal challenges facing the City.
NOW THEREFORE, the City Council of the City of West Covina does resolve
the following :
ATTEST:
SE CTI ON 1. That Resolution 2016-72, related to the monthly stipend for
serving in City non-elected commissions is hereby repealed in its entirety.
SECTION 2. City Commissioners shall not receive a stipend for serving on a
City Commission.
SECTION 3. The effective date of this Resolution is July 1, 2018.
SECTION 5. The City Clerk shall certify to the adoption of this Resolution.
APPROVED and ADOPTED this 19th day of June 2018.
Lloyd Johnson
Mayor
Nickolas S. Lewis
City Clerk
I NICHOLAS LEWIS, CITY CLERK, of the City of West Covina, do hereby certify that the
foregoing resolution was duly adopted by the City Council of the City of West Covina,
California at a regular meeting thereof held on the 19111 day of June 2018.
AYES:
NOES:
ABSTAIN:
ABSENT:
APPROVED AS TO FORM:
Kimberly Hall Barlow
City Attorney
Nickolas S. Lewis
City Clerk
DATE:
TO:
FROM:
AGENDA
ITEMNO. 3
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
June 11, 2018
Mayor and City Council
Chris Freeland
City Manager
SUBJECT: ORDINANCE ELIMINATING COMPENSATION FOR ELECTED CITY
CLERK AND CITY TREASURER
RECOMMENDATION:
Staff recommends that the City Council introduce the following Ordinance:
AN ORDINANCE NO. 2442 OF THE CITY COUNCIL OF THE CITY
OF WEST COVINA, CALIFORNIA, AMENDING CHAPTER 2
(ADMINISTRATION), ARTICLE IV (OFFICERS), DIVISION 3
(CITY CLERK) AND DIVISION 4 (CITY TREASURER) OF THE
WEST COVINA MUNICIPAL CODE
BACKGROUND:
The elected City Clerk's cun-ent salary of$150 per month was adopted by ordinance in 1981. Prior
to 2016, the elected City Treasurer received a $100 per month stipend. In 2016, the City Council
adopted Ordinance 2298 increasing the City Treasurer's compensation to $150 per month.
Ordinance No. 2442 Eliminating Compensation for Elected City Clerk and City Treasurer
Page 2 of2-June 11, 2018
DISCUSSION:
At the May 14, 2018, Preliminary Budget Workshop, the City Council instrncted staff to
' move forward with the elimination of stipends for the elected City Clerk and the elected
City Treasurer due to the current fiscal challenges facing the City. In an effort to have this
in place as soon as possible for budget purposes, City staff is recommending the
introduction of Ordinance No. 2442 (Attachment No. 1 ).
OPTIONS:
The City Council has the following options:
I. Adopt staffs recommendation; or
2. Provide alternative direction.
FISCAL IMP ACT:
Adoption of Ordinance No. 2442 will generate an annual General Fund savings of $3,600.
Prepared by:
Approved Via Email
Kimberly Hall Barlow
City Attorney
ATTACHMENTS:
Attachment No. 1 -Ordinance No. 2442
ATTACHMENT NO. 1
ORDINANCE NO. 2442
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
WEST COVINA, CALIFORNIA, AMENDING CHAPTER 2
(ADMINISTRATION), ARTICLE IV (OFFICERS), DIVISION 3
(CITY CLERK) AND DIVISION 4 (CITY TREASURER) OF THE
WEST COVINA MUNICIPAL CODE
WHEREAS, the City of West Covina provides compensation by ordinance to the elected City
Clerk and the elected City Treasmer;
WFIEREAS, the City of West Covina increased compensation for the City Treasurer in 2016;
WHEREAS, the City of West Covina wishes to eliminate compensation for the elected City
Clerk and the elected City Treasurer due to the fiscal challenges facing the City.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA,
CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS:
SECTION NO. 1: Section 2-162 (Salaiy) of Division 3 (City Clerk) of Article IV (Officers) of
Chapter 2 (Administration) of the West Covina Municipal Code is hereby =ended to read:
Sec. 2-162. -Salary.
The elected city clerk shall receive no salaiy or other compensation.
SECTION NO. 2: Section 2-172 (Compensation) of Division 4 (City Treasurer) of Article IV
(Officers) of Chapter 2 (Administration) of the West Covina Municipal Code is hereby 3111ended to
read as follows:
Sec. 2-172. -Compensation
The elected City Treasurer shall receive no compensation or other benefits.
SECTION NO. 3: Conflicting Provisions. All ordinances or resolutions inconsistent or
conflicting with any part of this ordinance are hereby repealed to the extent of such inconsistency
or conflict.
SECTION NO. 4: Severability. If any aiiicle, section, subsection, subdivision, sentence, clause,
phrase, word, or potiion of this Ordinance, or the application thereof to any person, is for any
reason held to be invalid or unconstitutional by the decision of any court of competent
jurisdiction, such decision shall not affect the validity of the remaining portion of this Ordinance
or its application to other persons. The City Council of West Covina hereby declares that it
would have adopted this Ordinance and each chapter, aiiicle, section, subsection, subdivision,
sentence, clause, phrase, word, or po1iion thereof, i1Tespective of the fact that any one or more
subsections, subdivisions, sentences, clauses, phrases, or portions of the application thereof to
any person, be declared invalid or unconstitutional.
SECTION NO. 5: Effective Date. This ordinance shall take effect thirty (30) days after its
initial passage and within fifteen (15) days after its passage, the Assistant City Clerk of the City
of West Covina shall certify to the passage and adoption of this ordinance and to its approval by
the Mayor and City Council and shall cause the same to be published in a newspaper in the
manner required by law.
PASSED AND APPROVED on this_ day of July, 2018.
ATTEST:
Rosalia Butler
Assistant City Clerk
Lloyd Johnson
Mayor
I, ROSALIA BUTLER, ASSIST ANT CITY CLERK of the City of West Covina, California, do
hereby certify that the foregoing Ordinance was regularly introduced and placed upon its first
reading at a regular meeting of the City Council on this_ day of July, 2018. That thereafter said
Ordinance was duly adopted and passed at a regular meeting of the City Conncil on the day
of July 2018, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Rosalia Butler
Assistant City Clerk
APPROVED AS TO FORM:
Kimberly Hall Barlow
City Attorney
AGENDA STAFF REPORT
City of West Covina | Office of the City Manager
DATE: June 11, 2018 TO: Mayor and City Council
FROM: Chris Freeland
City Manager SUBJECT: FISCAL YEAR 2018-19 SECOND PRELIMINARY BUDGET
WORKSHOP
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Provide Staff direction on the various City priorities related to the Fiscal Year 2018-19
Operating and Capital Improvement Program Budget; and
2. Direct staff to take advantage of the prepayment option for the PERS unfunded liability
payment, totaling $10,060,883, and direct staff to utilize the balance of the Section 115 Pension Trust toward this pre-payment.
BACKGROUND:
On January 30, 2018, the Finance Department held a Fiscal Year (FY) 2018-19 budget kickoff meeting with City of West Covina staff to begin the development of the FY 2018-19 budget. All
department budgets were turned into the Finance Department by March 1, 2018, and reviewed
with the City Manager over the course of the following weeks. The Finance Department is
responsible for the development of the preliminary and final budget preparation.
As part of the FY 2018-19 Operating and Capital Improvement Program (CIP) Budget preparation,
one Community Budget Workshop was held on May 7, 2018. A FY 18-19 Preliminary Budget
Workshop was held on May 14, 2018.
At the first Community Budget Workshop, staff provided a Budget 101 to the residents to learn the basics of municipal financing, including terminology, sources of revenues, use of funds, types
of funds, and reserves.
AGENDA
ITEM NO. 4
Second Preliminary Budget Workshop
Page 2 of 11 – June 11, 2018
On May 14, 2018, Staff shared information on the various funds that make up the City of West Covina’s Budget, department responsibilities and discussed the current financial state of the City.
Staff requested feedback from the City Council regarding the proposed budget priorities. In
addition, Staff sought direction from the City Council on various measures that will help close the
FY 2018-19 General Fund deficit of $8.7 million and to discuss options to replenish the City’s
General Fund reserves to 20% of the FY 2018-19 operating expenditures.
On June 5, 2018, the City Council approved Resolution 2018-64 to change the Fund Balance
Reserve Policy. The Fund Balance Reserve Policy states that the City shall maintain a minimum
unassigned fund balance of at least 17% of General Fund operating expenditures. If the reserve
level ever falls below 17%, the City must amend this policy with a plan to rebuild it within three years. At the fiscal year end close, the annual excess revenue over expenditures in the City’s
General Fund will be automatically allocated as follows, unless the transfer is overridden by an
action of the City Council: 25% stays in the General Fund Balance reserves, 50% is transferred to
the City’s Capital Projects Fund, and 25% goes to pay down the City’s Other Post Employment
Benefit (OPEB) liability.
City Fund Structure
A number of different funds are utilized to account for the City, the Successor Agency to the
Former Redevelopment Agency, and the West Covina Housing Authority financial resources. Funds are classified into the following fund types:
• General Fund
• Special Revenue
• Debt Service
• Capital Project
• Proprietary
• Private Purpose Trust
The City has established multiple funds, under each fund type, to assist in accounting and record
keeping for the City and outside agencies. A brief description of all the funds are provided in Attachment No. 1.
Preliminary Budget Information as of May 14, 2018
As of May 14, 2018, estimated FY 2018-19 revenues (including transfers in) on an all funds basis are $119,470,643. Many funds make up the total budget amount, with the largest being the General
Fund in the amount of $61,795,577, or 52% of the City’s total budget.
Second Preliminary Budget Workshop
Page 3 of 11 – June 11, 2018
Estimated expenditures (including transfers out) for all budgeted funds are estimated at $127,611,584. Many funds make up the total budget amount, with the largest being the General
Fund in the amount of $70,468,677, or 55% of the organization’s total.
Personnel costs inclusive of all City funds are anticipated to increase by $6.3 million from $58.3
million for FY 2017-18 to $64.6 million for FY 2018-19. The majority of the increase is a result of Public Employment Retirement System (PERS) rate increases for pension benefits, increased
General Fund
52%
Special Revenue
Funds
19%Capital Project Funds
5%
Debt Service Fund
5%
Internal Service
Funds
5%
Enterprise Fund
1%
Successor Agency
13%
Total Revenues by Fund Type
$119,470,643
General Fund
55%
Special Revenue
Funds
20%Capital Project Funds
3%
Debt Service Fund
4%
Internal Service
Funds
4%
Enterprise Fund
1%
Successor Agency
13%
Total Expenditures by Fund Type
$127,611,584
Second Preliminary Budget Workshop
Page 4 of 11 – June 11, 2018
medical costs, funding for Fire Engine No. 4, and the elimination of the $1.5 million managed savings for Public Safety.
General Fund
The City’s principal financial goal is to provide an appropriate level of municipal services with the ability to adapt to local and regional economic changes, while maintaining and enhancing the
sound fiscal condition of the City. The City’s General Fund has been negatively impacted in the
past number of years by the economic recession, increases in pension costs, the State’s elimination
of redevelopment, and the State’s raid of local revenues.
General Fund Revenues:
Total General Fund revenues are projected to be $61,795,577, a decrease of $1 million or 1.6%
from the prior year adopted budget. The decrease is due to a decrease in Sales Tax revenues and
a decrease in Charges for Services such as the Emergency Medical Service Assessment Fee,
Planning Filing Fees, and Fire Plan Check/Inspection Fees.
General Fund Expenditures:
General Fund expenditures for FY 2018-19 are projected to be $70,468,677. This equates to an
increase in expenditures of 12%, or $7,558,093 when compared to the adopted budget for FY
2017-18. The increase is due to a $5.6 million increase in personnel costs and a $2 million increase
in materials and services. Personnel increases are due to rising PERS and medical costs, maintaining Fire Engine No. 4, and the elimination of the $1.5 million managed savings for Public Safety that was budgeted in FY 2017-18. Increases in materials and services include a $567,148
transfer to the Capital Projects Fund for residential street rehabilitation in order to meet the City’s
required maintenance of effort under Senate Bill 1, an increase in Property & Liability Insurance
Property Taxes
40%Sales Tax
26%
Other Taxes
15%
Licenses & Permits
2%
Fines & Forfeitures
1%Use of Money
and Property
2%
Revenue from other
Agencies
4%
Charges for Service
8%
Interdepartmental
Charges
2%
Other Revenue
<1%
Transfers In
<1%
General Fund Revenues
$61,795,577
Second Preliminary Budget Workshop
Page 5 of 11 – June 11, 2018
charges, a transfer to cover the anticipated Police Service Group deficit, increases in contract costs, utilities, and legal expenses, and expenditures related to the upcoming election.
Support Services
$6,347,367
9%Planning
$699,301
1%
Police
$31,869,700
45%
Fire
$21,279,309
30%
Public Works
$4,431,569
6%
Community Services
$2,795,184
4%
Transfers Out
$3,046,247
5%
General Fund Expenditures by Department
$70,468,677
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
14/15 Actual 15/16 Actual 16/17 Actual 17/18 Adjusted
Budget
18/19
Proposed
Budget
General Fund Comparison
Revenues
Expenditures
Second Preliminary Budget Workshop
Page 6 of 11 – June 11, 2018
General Fund Reserves: The General Fund ending unassigned fund balance, or reserve, is equivalent to a “savings account”
to cover unexpected costs or significant economic changes. The intent is to not use this for normal
operating expenses. Unless changes are made to this preliminary budget, the General Fund ending
unassigned fund balance is projected to be $1.6 million, which is 2.27% of operating expenditures.
A summary of the General Fund balance as of May 14, 2018 is illustrated below:
Capital Improvement Program (CIP): Staff is recommending a number of CIP projects for FY 2018-19, with the majority of them being funded from special revenue funds. These projects are listed on Attachment No. 2 and include an
Energy Efficiency for City Buildings project, which staff is proposing to have funded through a
City loan, Sewer Main Replacement, upgrades to the Azusa sewer lift station, major and residential
street rehabilitation, and Citywide Schools Crosswalk Improvements. Two projects are being funded by the General Fund for a total of $657,148. The two General Fund CIP projects are for a Historic Resources Study Update and the City’s Senate Bill 1 Maintenance of Effort portion of the
Residential Rehab project.
As of May 14, 2018, the General Fund budget deficit was $8.7 million. To replenish reserves to meet the City’s Fund Balance Policy of 20% of operating expenditures, an additional $3.6 million is needed, for a total of $12.3 million.
Second Preliminary Budget Workshop
Page 7 of 11 – June 11, 2018
DISCUSSION:
The goal of this Second Preliminary Budget Workshop is to receive direction from the City
Council on various measures that will help close the FY 2018-19 General Fund deficit. In addition,
Council needs to discuss options to replenish the City’s General Fund reserves to 17% of the FY
2018-19 operating expenditures.
Revisions to the Preliminary Budget
Since the May 14, 2018 Preliminary Budget Workshop, staff made a number of revenue and
expenditure revisions to the budget. The revenue adjustments are based on new information from the Department of Finance and to bring various revenue projections in line with projected actuals
for the current fiscal year. The expenditure adjustments are based on new information from the
Department of Health Care Services (DHCS), to correct the chargebacks, and Fire personnel
budgets. These revisions include:
Revenue Adjustments
1) Increase Ambulance Service revenues 443,227
2) Increase Parking Fine revenues 75,000
3) Increase State Mandated Claims 74,500
4) Increase Towing Franchise revenues 50,000 5) Increase Cell Tower Rent 10,000
6) Increase Waste Management revenues 5,000
7) Adjust Successor Agency Admin Allowance (119,608)
Total Revenue Adjustments $538,119
Expenditure Adjustments
1) Correct Property & Liability Insurance Chargebacks 15,152
2) Correct Fire personnel budget 95,211
3) Add 3 Firefighters to the Quint 355,832 4) Pymt to DHCS for Ground Emergency Medical Transport Audit 357,000
Total Expenditure Adjustments $823,195
The net effect of these revisions is an increase of $285,076 to the General Fund Operating Deficit. In addition, in accordance with the adoption of Resolution 2018-64 (Fund Balance Reserve
Policy), the 17% of operating expenditures as a minimum for unassigned fund balance has been
applied.
Second Preliminary Budget Workshop
Page 8 of 11 – June 11, 2018
An updated summary of the General Fund balance with the above revisions is illustrated below:
May 14, 2018 City Council Direction
At the May 14, 2018 Preliminary Budget Workshop, the City Council provided direction to
incorporate the following revenue enhancements in the Preliminary Budget:
1) Business License – Commercial Rental clean-up 385,000
2) Towing Industries 200,000
3) Annexations – South Hills and Shadow Oak 100,000
4) Transfer of fund balance from Vehicle Replacement Fund 140,000 5) Sale of City/Successor Agency Properties 163,000
(AAA and MLC Properties)
Total Revenue Items $988,000 In addition, the City Council provided direction on the following expenditure cuts to be
incorporated into the Preliminary Budget:
1) Make PERS Pre-payment and deplete Section 115 Trust 613,450
2) Eliminate vacant positions: a. Community Services Coordinator 68,157
b. Finance Accounting Technician 67,719
3) Cut Commission/Treasurer/City Clerk stipends 19,927
Total Expenditure Items $769,253
Second Preliminary Budget Workshop
Page 9 of 11 – June 11, 2018
Based on these recommendations, the General Fund estimated revenues are projected to be $63,321,696 and the General Fund expenditures are projected to be $70,522,619. The General
Fund budget deficit decreased from $9 million to $7.2 million. An additional $1.6 million is needed
to meet the City’s 17% reserve requirement, for a total of $8.8 million still needed.
The City Council also gave direction to incorporate the addition of a new Technology Fee into the
City’s Fee Schedule. If approved, this fee is estimated to generate approximately $230,000 per
year in revenues to the City. However, these revenues would be set aside into a separate account to be used specifically for technology upgrades related to Building and Engineering, and thus
would have no impact on the General Fund fund balance.
In addition, the City Council provided direction for staff to increase fees on the City’s Fee
Schedule, for an estimated $113,000 in additional revenues. However, due to the City’s financial condition and anticipated delays in adopting the FY 2018-19 Budget, estimated increases to
existing fees may not be fully realized, and thus were not incorporated. The City’s fees are based
on a number of factors and potential restructuring in various departments could drastically change
fee amounts.
On May 1, 2018, staff proposed amending the business license tax ordinance. The proposed
amendment to the ordinance was to adopt a new fee structure for business license taxes based upon
Gross Receipts – Classification Based Tax Rates. This proposed fee structure was projected to
generate a $1.7 million additional revenue. This amendment to the Business License Ordinance,
which would increase the City’s business license tax, would require voter approval. However, prior to be able to call an election it must be approved by at least four members of the City Council.
On May 14, 2018, there was a lack of the required City Council votes in order to proceed for a tax
ballot measure.
Second Preliminary Budget Workshop
Page 10 of 11 – June 11, 2018
City Council Direction
The following are some revenue enhancement options and expenditure cuts recommended by Staff
at the May 14, 2018 meeting that were requested by the City Council to be brought back for further
discussion:
1) Charge sports groups for field usage/lighting 250,000 2) Crossing guard shared costs 100,000
3) Cut special events 150,000
Total $500,000 In addition, each City department was given a directive by the City Manager to prepare a list of
10% across the board expenditure cuts for City Council consideration. These items will be
presented during the budget presentation.
CalPERS Prepayment and Section 115 Pension Trust
Staff recommends the City Council to take advantage of the CalPERS unfunded liability pre-
payment option and to utilize the balance in the Section 115 Trust toward this pre-payment. Rather
than make monthly payments towards the City’s unfunded liability, the City can make a pre-payment of $10,060,883 in July 2018, which will save approximately $364,393 over the course of the year. The current balance in the Section 115 Trust is approximately $320,000, which can also
be used toward the pre-payment.
A continuing budget resolution is scheduled to be on the June 19, 2018 City Council Meeting to enable Staff to continue to make revenue and expenditure adjustments as necessary to bring a balanced FY 2018-19 budget to the City Council.
FISCAL IMPACT:
Taking advantage of the PERS pre-payment option and utilizing the balance in the Section 115
Trust toward this payment will save the City approximately $684,393 across all City funds.
Each of the proposed department cuts are likely to impact City Services to varying
degrees. Freezing of vacant positions or other similar cuts to the organization staffing levels will
increase the workload on current employees; may impact wait times at public counters and
processing times for service requests; and likely increase response times from Public Safety on
emergency and non-emergency calls. City staff will make every effort to continue to provide the
best quality service to our customers with the resources available.
Second Preliminary Budget Workshop
Page 11 of 11 — June 11, 2018
Prepared by:
ATTACHMENTS:
Attachment No. 1 — City Fund Structure
Attachment No. 2— 2018-19 Project Summary by Fund Number
CITY FUND STRUCTURE
A number of different funds are utilized to account for the City, the Successor Agency to the
Former Redevelopment Agency, and the West Covina Housing Authority financial resources.
Funds are classified into the following fund types:
General Fund
Special Revenue
Debt Service
Capital Projects
Proprietary
Private Purpose Trust
The City has established multiple funds, under each fund type, to assist in accounting and record
keeping for the City and outside agencies.
GENERAL FUND TYPE
General Fund (Fund 110)
The General Fund is the City’s largest single fund type and is used to account for unrestricted
revenues. The City’s General Fund is the main operating fund for non-restricted revenues, such
as general taxes and fees. Appropriations may be made from the General Fund for City activities.
This fund is used to account for basic City services such as police, fire, recreation, building,
planning, and general administration. Within the General Fund, the City maintains non-spendable
(not available) and unassigned (available) reserves that represent the unappropriated fund balance.
SPECIAL REVENUE FUNDS
Asset Seizure (Funds 116 and 117)
Asset Seizure revenues are received based on the City’s participation in drug-related asset seizures.
Funds are received from federal and state agencies. These funds are restricted to uses that enhance
the police department’s activities.
Air Quality Improvement Trust (Fund 119)
In 1991-1992, the state passed AB 2766, the State’s Air Quality Improvement Trust Fund. An
increase in motor vehicle license fees collected by the State of California supports this state fund.
The City receives a portion of the fees to enhance the City’s clean air efforts.
Proposition A (Fund 121)
Under Proposition A, the City receives a portion of the ½ cent of sales tax levied in Los Angeles
County to provide transportation-related programs and projects. For years the City has sold its
Proposition A funds to other cities in exchange for non-restricted General Fund dollars.
ATTACHMENT NO. 1
Proposition C (Fund 122)
Under Proposition C, the City receives a portion of an additional ½ cent sales tax approved for
transportation-related programs in Los Angeles County. The funds may be used for certain capital
projects or transportation projects similar to those allowed under Proposition A. Projects include
street rehabilitation and reconstruction, traffic monitoring systems, congestion management and
planning, bus shelter maintenance, Park-and-Ride lots, the City’s shuttle and Dial-A-Ride services
and recreational transit services.
Gas Tax (Fund 124)
This fund accounts for State Gas Tax monies received under various state laws. The funds are
used to fund the City’s street maintenance program. Activities include ongoing minor street
repairs, upgrades of traffic signals, replacement and installation of new traffic signs and street
painting. Programs are administered through the Public Works Department.
Police Donations (Fund 127)
This fund accounts for donations received and expenditures related to various police programs.
Transportation Development Act (Fund 128)
Transportation Development Act funds are received through the County and may only be used for
specific transportation development purposes. These funds are generally used by the City for
sidewalk rehabilitation and construction, and the long-term transportation planning efforts within
the City.
AB 939 (Fund 129)
This fund accounts for revenues and expenditures of programs implemented to meet the
requirements of the California Integrated Waste Management Act of 1989 (AB 939). Revenues
are generated through a waste management fee. Programs funded include the development and
implementation of a solid waste reduction and recycling project, household hazardous waste
disposal project, and solid waste management activities.
Community Development Block Grant (Fund 131)
This fund accounts for activities of the Community Development Block Grant received from the
U.S. Department of Housing and Urban Development, including monies received from this agency
as part of the federal stimulus program.
Surface Transportation Program (STP) Local (Fund 140)
The Intermodal Surface Transportation Efficiency Act of 1992 (ISTEA) is the Federal Highway
Program. This fund accounts for federal money received for use in improving certain major
streets. Caltrans and the Federal Highway Administration must approve projects.
LA County Park Bond (Fund 143 & 210)
These funds account for grant money received through the Los Angeles County Regional Park
and Open Space District Grant.
Waste Management Enforcement Grant (Fund 145)
This fund accounts for the money received from the State of California to help support the local
enforcement agent who monitors the local closed landfill.
Senior Meals Program (Fund 146)
This program provides meals to low-income seniors with funding from the United States
Department of Agriculture and Area Agency on Aging. The program also receives donations from
seniors for the meals served.
Used Oil Block Grant (Fund 149)
The California Integrated Waste Management Board (CIWMB) provides grant funds to cities to
promote used motor oil recycling.
Inmate Welfare (Fund 150)
This fund accounts for any money, refund, rebate or commission received from a telephone call
from inmates while incarcerated to meet the requirements of California Penal Code: Part 3; Title
4; Chapter 1; Section 4025. The monies are to be expended for the benefit, education, and welfare
of inmates confined within the jail. Any funds that are not needed for the welfare of the inmates
may be expended for the maintenance of the jail facilities.
Public Safety Augmentation (Fund 153)
This fund accounts for the permanent extension of the sales tax by ½ cent guaranteed under
Proposition 172. These revenues are restricted to the enhancement of public safety services.
Revenue is allocated based on each qualified county’s proportionate share of statewide taxable
sales.
COPS/SLESA (Fund 155)
This fund accounts for grant revenue provided by the state to support Community Oriented
Policing programs. Funds must be spent on front-line law enforcement services.
Beverage Container Recycling Grant (Fund 158)
The Beverage Container Recycling Grant provides funds derived from consumer deposits on
beverage containers. These funds are to be used for beverage container recycling and litter cleanup
activities.
Summer Meals Program (Fund 159)
This fund comes from the Food and Nutrition Service (FNS) of the United States Department of
Agriculture, which provides a free lunch to children on weekdays during the summer months.
Maintenance District Funds (Fund 18x)
The City levies special benefit assessments and property taxes upon property within defined
districts. Through the Los Angeles County Tax Collector, assessments are placed on the property
owner’s annual tax bill. These funds are used to maintain and improve the open spaces within the
districts by providing landscape maintenance. Assessment districts currently established in the
City include:
Maintenance District #1 (Fund 181)
Maintenance District #2 (Fund 182)
Maintenance District #4 (Fund 184)
Maintenance District #6 (Fund 186)
Maintenance District #7 (Fund 187)
Coastal Sage and Scrub Community Facilities District (Fund 183)
This community facilities district was formed to provide for the restoration and ongoing
maintenance of sensitive environmental habitat within the development area of a former landfill,
including habitat for endangered species such as the California gnatcatcher (Polioptila
californica).
Citywide Maintenance District (Fund 188)
This is the City’s most significant special assessment fund. Revenue for the fund comes from
annual special benefit assessments from property owners who benefit from covered
improvements. The Citywide Assessment District provides the majority of funding for the City’s
street lighting system and street tree program.
Sewer Maintenance (Fund 189)
This fund supports the City’s street sweeping program and maintenance of the City’s sewer
system.
Business Improvement District (Fund 190)
This is an assessment district supported by six of West Covina’s automobile dealers to fund the
construction, maintenance and operation of a reader board adjacent to Interstate 10.
Police Grant Funds
These funds come from federal or state grants to provide funding for various public safety
programs.
Bureau of Justice Assistance Grant (Fund 130), Alcohol Beverage Control (ABC) Grant
(Fund 138), and Police Private Grants (Fund 221)
Charter PEG (Fund 205)
Charter Communications awarded the City a $150,000 Public Education Grant for a number of
years. Due to changes in communications rules, no additional grant revenue is being received.
The money remaining in this fund can only be used to make capital expenditures related to the
City’s Public Access Channel.
Art in Public Places (Fund 212)
This fund accounts for development fees paid in lieu of acquisition and installation of approved
artwork in a development, with expenditures restricted to acquisition, installation, maintenance
and repair of artworks at approved sites.
WC Community Services Foundation (Fund 220) This fund is used to account for activity of the West Covina Community Services Foundation, a 501(c)(3) non-profit organization. Measure R (Fund 224)
Under Measure R, the City receives a portion of a ½ cent sales tax levied in Los Angeles County
to provide transportation related projects and programs. The City uses Measure R Funds to
provide a variety of transportation services including Dial-A-Ride and the West Covina Shuttle (a
fixed route system.
Taskforce for Regional Auto Theft Prevention (TRAP) Grant (Fund 233) A regional law enforcement taskforce know as TRAP is funded through vehicle registration fees pursuant to Vehicle Code section 9250.14 (SB-2139). The primary mission of TRAP is to combat auto thefts and spearhead major investigations related to vehicle thefts throughout the Southern California regions.
City Law Enforcement Grant (Fund 234)
This fund accounts for personnel costs that are reimbursable through the Board of State and
Community Corrections (BSCC) City Law Enforcement Grant.
Measure M (Fund 235)
Under Measure M, the City receives a portion of a ½ cent sales tax levied in Los Angeles County
to provide transportation related projects and programs. The City uses Measure M Funds for
certain capital projects or transportation projects such as street rehabilitation and reconstruction,
traffic monitoring systems, and congestion management and planning.
Measure A (Fund 236)
Under Measure A, the City receives a portion of a 1.5 cent per square foot parcel tax levied in Los
Angeles County to help fund new parks and maintain existing ones. The City uses Measure A
Funds for certain capital projects related to parks, such as rebuilding restrooms, updating park
parking lots, and the purchase of new playground equipment.
SB1 – Road Maintenance Rehab (Fund 237)
Senate Bill (SB) 1, known as the Road Repair and Accountability Act of 2017, increased per gallon
fuel excise taxes, increased diesel fuel sales taxes and vehicle registration fees, and provides for
inflationary adjustments to tax rates in future years, to address basic road maintenance,
rehabilitation and critical safety needs on both state highways and local streets. The City uses
SB1 funding for street improvements such as residential road rehabilitation.
West Covina Housing Authority (Fund 820)
Under ABX1 26, the housing functions were transferred to the West Covina Housing Authority
with the adoption of Resolution No. 2012-11 by the West Covina City Council on January 17,
2012. Accordingly, all rights, powers, duties and obligations related to the housing functions have
been assumed by the Housing Authority and it may enforce affordability covenants, and perform
related activities pursuant to the applicable provisions of the Community Redevelopment Law.
ABX1 26 provides that the non-cash housing assets and obligations of dissolving redevelopment
agencies ("RDAs") do not pass to the Successor Agencies formed to wind-down each RDA, but
rather to the Housing Successor Agency. As such, decisions regarding such housing assets and
obligations are not subject to approval by the Oversight Board of the Successor Agency.
This fund will accumulate loan repayments from homeowners and multi-family housing
developers per agreements that were put in place using low and moderate income housing funds
of the former Redevelopment Agency. Those funds, along with repayment of the Supplemental
Educational Revenue Augmentation Fund loans that were previously made by the housing fund of
the former Redevelopment Agency, will be used to continue to provide low and moderate income
housing programs in compliance with state law regarding affordable housing.
CAPITAL PROJECT FUNDS
Capital Projects (Fund 160)
The fund was established by the City Council to serve as the source of capital funding for projects
that have no other funding source.
Construction Tax (Fund 161)
The Construction Tax Fund receives monies from developers based on the construction of
dwelling units in the City. These funds are then used to purchase or construct public facilities,
such as street reconstruction, traffic signal modifications, curb and gutter replacements and
rehabilitation of park structures and equipment.
Information Technology (Fund 162)
The funds paid into this fund are to be used for information technology capital outlay projects.
Development Impact Fees (Fund 16x)
The City receives one-time fees on new development to be used to cover costs of capital equipment
and infrastructure required to serve new growth. The following funds have been established:
Fund 164 – Police Impact Fees
Fund 165 – Fire Impact Fees
Fund 166 – Park Impact Fees
Fund 167 – City Administrative Impact Fees
Fund 168 – Public Works Impact Fees
Park Acquisition (Fund 169)
The funds paid into this fund are to be utilized for new parkland acquisition and the development
of new parkland.
Park Dedication Fees (Fund 17x)
The City receives fees from developers to fund recreation facilities. The City has been divided
into seven park districts for purposes of collecting revenue. These funds are used for qualified
recreational purposes throughout the City. The following Districts have been established:
Fund 170 – Park District “A”
Fund 171 – Park District “B”
Fund 172 – Park District “C”
Fund 173 – Park District “D”
Fund 174 – Park District “E”
Fund 175 – Park District “F”
Fund 176 – Park District “G”
Fund 177 – Park District “H”
DEBT SERVICE FUND
Debt Service (Fund 300)
The City has established one Debt Service Fund to accumulate assets for the repayment of City
long-term debt, which includes outstanding bonds, notes, capital leases and related costs. Funding
is accumulated from interest income, developer reimbursements, and transfers from the General
Fund and the Successor Agency.
INTERNAL SERVICE FUNDS
Self-Insurance - General and Auto Liability (Fund 361)
Funding for general/auto liability claims, uninsured losses and insurance premiums is provided
through a charge on all operating departments based on prior year claims expense.
Self-Insurance - Workers’ Compensation (Fund 363)
Funding for workers’ compensation is derived from a percentage charge of all salaries with
different rates levied for the various employee categories.
Fleet Management (Fund 365)
The Maintenance Division of the Public Works Department operates the fleet management
function for the City which oversees the repair and disposal of City vehicles and heavy equipment.
Revenue for the fleet management fund is generated through charges to operating departments.
Each department that operates assigned vehicles is charged based on the departmental usage of
the vehicles. Fleet management costs are reflected in each department’s line-item budget.
Vehicle Replacement (Fund 367)
The City put surplus funds into this fund for the replacement of vehicles to update the fleet and
save on maintenance costs.
Retirement Health Savings Plan (368)
This fund accounts for the set-aside lump sum benefits for retiring employees.
ENTERPRISE FUND
Police Computer Service Group (Fund 375)
This fund accounts for the computer services provided by the Police Department to other public
safety agencies for a fee. The programs are marketed to both public and private agencies. The
program also provides these products and services to the West Covina Police Department.
SUCCESSOR AGENCY
Successor Agency Redevelopment Obligation Retirement (Fund 810)
The City’s Redevelopment Agency was dissolved as a result of the passage of ABX1 26, and the
Successor Agency was subsequently created for the purpose of winding down the affairs of the
former Redevelopment Agency. The responsibilities of the Successor Agency are to (1) continue
to make payments on the outstanding debt of the former Redevelopment Agency for items that are
deemed to be “enforceable obligations”, and (2) wind down the activities of the Redevelopment
Agency through the sale and disposition of assets and properties. The Successor Agency will
receive allocations of property tax increment in amounts determined by the State Department of
Finance (DOF) and deposited into the Redevelopment Property Tax Trust Fund (RPTTF) by the
county. Those RPTTF allocations will then be used to pay the enforceable obligations.
Successor Agency Administration (Fund 815)
This fund is for all allowable administrative expenses of the Successor Agency, including salaries
and benefits, legal costs, appraisals, consultants, and other administration and overhead charges
as well as support costs incurred for the Oversight Board. The Successor Agency receives an
annual amount equal to 3% of the RPTTF allocation approved for payment of enforceable
obligations.
CFD Debt Service (Fund 853)
This fund was established as part of the Fashion Plaza Expansion Project of the former
Redevelopment Agency for the purpose of issuing bonds to assist in the expansion of the leasable
square footage and parking facilities of a regional shopping mall. The fund collects revenues from
a special tax assessment on the property, as well as sales and property tax increment revenues
generated on the property. Those revenues are used to service the principal and interest payments,
and related costs of the outstanding bonds.
FY 2018-2019 PROJECT SUMMARY BY FUND
NO FUND NO.FUND PROJECT AMOUNT
18002 122 Prop C Cortez Senior Center Parking Lot & Cortez Park Parking Lot - Citrus
Entrance 75,000
S-4 122 Prop C Bus Stop Enhancement Program - Annual Program 25,000
18005 122 Prop C Major Street Rehabilitation - Azusa Avenue 700,000
TOTAL PROP C - 122 800,000
S-2 128 TDA Annual Concrete/Sidewalk/Stamped Concrete/Curb & Gutter Replacement
Program 70,000
TOTAL TDA - 128 70,000
18004 131 CDBG Cortez Senior Center - Main Facility & North Wing - Replace carpet &
vinyl flooring, & paint interior & exterior 70,000
B-14 131 CDBG Restroom Renovation at Senior Center 200,000
C-1 131 CDBG Senior Center Roof Replacement 150,000
TOTAL CDBG - 131 420,000
S-10 140 STPL Major Street Rehabilitation - Annual Program 500,000
TOTAL STPL - 140 500,000
18002 143 PBG Cortez Senior Center Parking Lot & Cortez Park Parking Lot - Citrus
Entrance 325,000
TOTAL PARK BOND GRANTS - 143 325,000
B-28 150 Inmate Welfare Repair Jail Doors & Paint Jail 14,895
TOTAL CONSTRUCTION TAX - 161 14,895
C-1 160 Capital Projects Energy Efficiency for City Buildings 1,250,000
SD-2 160 Capital Projects Historic Resources Study Update 90,000
S-9 160 Capital Projects Residential Street Rehabilitation - Annual Program 567,148
T-1 160 Grant Merced/Sunset Avenues - Left Turn 165,000
T-2 160 Grant Glendora/Merced Avenues - Left Turn 165,000
TOTAL CAPITAL PROJECTS - 160 2,237,148
B-22 161 Const Tax Misc. Building Repairs 20,000
B-28 161 Const Tax Repair Jail Doors & Paint Jail 16,975
TOTAL CONSTRUCTION TAX - 161 36,975
V-2 165 FIF Fire-Replace 2001 Ford Excursion, Fire Command Vehicle 11,200
TOTAL FIRE IMPACT FEES - 165 11,200
P-36 172 PDF "C"Orangewood Park/Soccer Complex - Security Fence & Gate 75,000
TOTAL PDF "C" - 172 75,000
P-5 174 PDF "E"Cortez Park Restroom Improvements 30,000
TOTAL PDF "E" - 174 30,000
16023 175 PDF "F"Shadow Oak Restroom, Lower Parking Lot & NPDES Improvements 92,000
TOTAL PDF "F" - 175 92,000
P-8 181 MD1 Tree Trimming 40,000
P-10 181 MD1 Landscape/Lighting/Concrete Improvements 100,000
TOTAL MD1 - 181 140,000
P-12 182 MD2 Tree Trimming 40,000
P-14 182 MD2 Landscape/Lighting/Concrete Improvements 100,000
TOTAL MD2 - 182 140,000
P-18 184 MD4 Tree Trimming 50,000
P-20 184 MD4 Landscape/Lighting/Concrete Improvements 100,000
TOTAL MD4 - 184 150,000
P-21 186 MD6 Tree Trimming 20,000
P-23 186 MD6 Landscape/Lighting/Concrete Improvements 50,000
TOTAL MD6 - 186 70,000
ATTACHMENT NO. 2
FY 2018-2019 PROJECT SUMMARY BY FUND
NO FUND NO.FUND PROJECT AMOUNT
P-24 187 MD7 Tree Trimming 20,000
P-27 187 MD7 Landscape/Lighting/Concrete Improvements 40,000
TOTAL MD7 - 187 60,000
P-29 188 CWMD Installation of Street Lights 30,000
TOTAL CWMD - 188 30,000
17022 189 Sewer Upgrades for 2700 Azusa Sewer Lift Station 475,000
U-6 189 Sewer Sewer Main Replacement 1,000,000
16023 189 Sewer Shadow Oak Restroom, Lower Parking Lot & NPDES Improvements 100,000
N-2 189 Sewer Catch Basin Trash Capture Device Installation Program 40,000
N-4 189 Sewer Storm Drain Repair at Cherrywood St & Walnut Creek Pkwy 75,000
U-8 189 Sewer Replacement/Repair of Pump Station Facilities at Freeway Undercrossings 50,000
TOTAL SEWER FUND - 189 1,740,000
17027 205 PEG Council Chambers Technology Upgrades 13,336
TOTAL PEG - 205 13,336
S-3 224 Measure R Median Drought Landscaping -Annual Program 200,000
S-10 224 Measure R Major Street Rehabilitation - Annual Program 500,000
T-5 224 Measure R Battery Replacement for Traffic Signal Battery Back-Up Systems 30,000
T-6 224 Measure R Flashing Beacons 150,000
T-11 224 Measure R Update Traffic Signal Controllers 50,000
T-15 224 Measure R Installation of Traffic Control Devices 50,000
T-16 224 Measure R Traffic Calming Improvements - Vine Avenue 300,000
S-13 224 Measure R Citywide Schools Crosswalk Improvements 300,000
TOTAL MEASURE R - 224 1,580,000
S-5 235 Measure M Bicycle and Pedestrian Improvements 200,000
S-12 235 Measure M Sidewalk Improvements at Merced Elementary School 200,000
T-3 235 Measure M Traffic Signal at Cameron/Citrus Avenues 250,000
T-17 235 Measure M Traffic Signal at Cameron Ave/Barranca Street 250,000
S-9 235 Measure M Residential Street Rehabilitation - Annual Program 800,000
TOTAL MEASURE M - 235 1,700,000
16023 236 Measure A Shadow Oak Restroom, Lower Parking Lot & NPDES Improvements 330,000
TOTAL MEASURE A - 236 330,000
T-1 237 SB1 Merced/Sunset Avenues - Left Turn 25,000
T-2 237 SB1 Glendora/Merced Avenues - Left Turn 25,000
S-9 237 SB1 Residential Street Rehabilitation - Annual Program 1,000,000
TOTAL SB 1 - 237 1,050,000
V-2 367 VR Fire-Replace 2001 Ford Excursion, Fire Command Vehicle 188,800
TOTAL VEHICLE REPLACEMENT - 367 188,800
GRAND TOTAL $11,804,354